Larry H. Miller buying Arizona dealerships
Larry H. Miller Dealerships, the 10th-biggest dealership group in the U.S. by sales, is about to get bigger.
The company expects to close Monday on seven dealerships in Arizona three in Avondale and four in Tucson. The multimillion-dollar deal, which the company believes will increase total vehicle sales at all its dealerships by 15 percent, is the biggest since Utah business man and philanthropist Larry Miller started the company in 1979, executives said.
"We are not revealing the price. But it is the largest transaction in our history and among the biggest in the automobile industry over the past several years," Steve Starks, executive vice president of Larry H. Miller Management Corp., said Thursday.
Whatever the cost, the acquisition is another big step forward for the company. Over the last four years, it has added 23 dealerships, for a 48 percent increase in stores. The latest additions will boost the number of stores to 55, representing 19 brands, in seven western states Utah, Arizona, Idaho, Colorado, New Mexico, Oregon and Washington.
"We anticipate this being 12,000 to 15,000 additional sales a year. In 2013, we hope to sell 90,000 new and used vehicles," Starks said. Only nine other dealership groups in the country sell more, according to Automotive News, a trade magazine.
The dealerships are being bought from Doug Moreland, a Denver businessman, and his partner, John Grant, who lives in Arizona and runs the stores. Larry H. Miller is taking on 424 employees, bringing the company's Arizona workforce to more than 1,000. Overall, Larry H. Miller has over 3,700 employees.
Auto sales are the biggest piece of the Larry H. Miller Group of Companies, the business empire built by Miller, who died in 2009 at age 64. Last year, revenues from the parent company, which also include the Utah Jazz franchise, movie theaters, television and radio stations, apparel stores, an insurance company and a finance company, totaled $3.5 billion. The automobile dealerships accounted for 85 percent, or close to $3 billion.
Utah and Arizona are the company's biggest vehicle markets. It has "19 or 20" dealerships in Utah, Starks said with another 13 in Arizona when the sale closes.
Company president Dean Fitzpatrick said the acquisitions won't give Larry H. Miller more leverage over car manufacturers. Instead, it helps to ensure its dealerships have exactly the inventory of cars and trucks needed for sale on its lots, Dean Fitzpatrick, the company's president, said.
The company's first Arizona location, a Toyota dealership, opened in Peoria in 1980. In 2007, the dealership group sold its 1 millionth car to a customer at Larry H. Miller Dodge, also in Peoria.
While the company wouldn't reveal a price for the latest purchases, the cost likely was high.
The average investment for a franchised dealership, which includes the building and inventory of used vehicles, was $11.3 million per dealership in 2007, according to chron.com, the Houston Chronicle's online news site. The Hearst-owned site cited Casesa Shapiro Group, a New York investment banking firm that offers financial advisory services to the automotive industry.
In part, prices are high because the number of dealerships in the U.S. has declined, driven out of businesses by the Great Recession. With fewer dealerships available, competition among potential buyers is stiff.
Because buying opportunities in the U.S. are limited, many automotive dealership groups are looking outside the country for growth opportunities, Starks said.
Larry H. Miller's latest acquisitions in Arizona
The Salt Lake City-based automotive dealership group will own 13 dealerships in Arizona after a deal to buys seven dealerships in Avondale (near Glendale) and Tucson closes on Monday.
The new dealerships are:
• Avondale Chrysler Jeep
• Avondale Dodge Ram
• Avondale Fiat
• Tucson Dodge Ram
• Tucson Chrysler Jeep
• Tucson Fiat
• Tucson Volkswagen