LMP Automotive Holdings Inc.’s revised agreement to acquire a 70 percent stake in eight Atlantic Automotive Group dealerships in New York is off, after the parties “mutually” agreed to terminate the deal.
The used-vehicle retailer and vehicle subscription provider said the proposed transaction — trimmed last month following October’s announcement for LMP to buy a 70 percent stake in 16 dealerships — was being canceled “primarily due to contiguous dealership location matters that the parties could not overcome,” LMP COO Richard Aldahan said late Thursday in a news release.
Last month, Aldahan told Automotive News the slimmed-down agreement was made to adhere to automaker preferences that retailers not own contiguous dealerships of the same brand. He said then that manufacturers typically don’t want a single owner with multiple same-brand stores in a concentrated geographic area.
Atlantic CFO Rob Dito told Automotive News that the companies reached the mutual decision within the past few days that there was “a lot to overcome.”
“Both sides decided that we shouldn’t go through with the deal,” Dito said, adding there is “no bad blood” between them.
Dito said his company, run by dealer John Staluppi Sr., now plans to focus on its brand and improve results in 2021.
“We’re not going to sell our company at this time,” he said.
In January, LMP said it would spend $193 million in cash and $38 million in LMP stock to finance the deal that was to include one Hyundai-Genesis, one Chevrolet, two Toyota, two Honda and two Hyundai stores on Long Island, plus a vehicle storage facility. The company then said the transaction was expected to close in April pending closing conditions and automaker approvals.
LMP had said the Atlantic acquisition was expected to generate $655 million in revenue and $15 million in net income for LMP in 2021.
LMP shares closed up 8.8 percent Thursday to $23.96 a share.
Atlantic will pay a portion of the LMP’s costs on the transaction, LMP said, but that figure was not disclosed.
“LMP believes it can deploy capital more efficiently at significantly lesser multiples of income than what it was paying for Atlantic Automotive Group,” Aldahan said in the release. “We are in the process of considering other alternative strategic transactions in our stage two acquisition plan, including mergers.”
Aldahan said its first wave of franchised dealership acquisitions would close “in the coming weeks.”
That first stage includes eight franchised dealerships in West Virginia, Florida and Tennessee, plus five used-vehicle stores in West Virginia.
LMP told Automotive News in January that its first block of franchised store acquisitions would close that month.
The first stage of stores is expected to add revenue of up to $540 million and up to $21 million in net income a year, LMP CFO Evan Bernstein said.
The publicly traded retailer also said it hired KPMG as its auditor.