Business Context and Reporting Period
Company: Asbury Automotive Group, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: September 28, 2021
Reporting Period: Event-based report regarding a material definitive agreement entered into on September 28, 2021.
Key Financial Metrics and Transaction Details
This filing details a major acquisition rather than periodic financial performance results. Key transaction metrics include:
- Total Aggregate Purchase Price: Approximately $3.1 billion.
- Asset Breakdown:
- Goodwill: $2.3 billion.
- Real Estate and Leasehold Improvements: Approximately $744 million.
- Parts and Fixed Assets: Approximately $100 million.
- Debt Financing Commitment:
- High Yield Bridge Facility: $2.35 billion.
- 364-Day Bridge Facility: $900.0 million.
- Total Committed Debt: $3.25 billion (subject to reduction upon completion of other financings).
Note: The filing text does not provide current revenue, profit, cash flow, or margin figures for the Company or the target businesses.
Material Changes and Transaction Structure
On September 28, 2021, Asbury Automotive Group, LLC (a wholly-owned subsidiary) entered into three agreements to acquire the businesses of the Larry H. Miller Dealerships and Total Care Auto (collectively, the "Businesses"):
- Equity Purchase Agreement: Acquisition of equity interests in the Larry H. Miller Dealerships.
- Real Estate Purchase Agreement: Acquisition of related real property from Miller Family Real Estate, L.L.C.
- Insurance Purchase Agreement: Acquisition of the Total Care Auto insurance business.
The transaction is not subject to a financing condition, though the Company has secured debt commitments from Bank of America, BofA Securities, and JPMorgan Chase.
Outlook, Risks, and Closing Conditions
Expected Closing: Fourth quarter of 2021, subject to approvals.
Material Closing Conditions:
- Approval by certain automotive manufacturers.
- Governmental clearances, including the expiration of the Hart-Scott-Rodino Antitrust waiting period.
- Required approvals related to the insurance business.
- Continued accuracy of representations and warranties.
- Absence of a material adverse effect on the Businesses.
Management Commentary: The Company and sellers have agreed to covenants to conduct operations in the ordinary course and cooperate to secure permanent financing prior to closing.
Investor Verification Checklist
- Verify the final closing date and whether all regulatory approvals (antitrust and insurance) were obtained.
- Confirm the final purchase price and any adjustments to the $3.1 billion aggregate amount.
- Review the terms of the permanent financing replacing the $3.25 billion in bridge loans.
- Assess the impact of the $2.3 billion goodwill on future earnings and potential impairment risks.
- Examine the integration plan for the Larry H. Miller Dealerships and Total Care Auto business.