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Republic on buying binge
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January 7, 1998: 1:09 p.m. ET
Huizenga, in $257 million acquisition spree, expands his dealership empire
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NEW YORK (CNNfn) - Shifting into high gear in its expansion drive, Republic Industries Inc. signed agreements Wednesday to acquire four new-vehicle dealerships in a $257 million buyout that reaffirms the company's second-to-none status in automotive retailing.
The holding company, led by its maverick billionaire chairman Wayne Huizenga, said the acquisitions of four southern-based dealerships would help "round out" its retail districts in the Houston, Orlando, South Florida and Atlanta markets.
With the latest additions, Republic Industries -- a one-time solid waste collector and disposer that has diversified its pursuits -- boosts its nationwide presence to 52 dealer groups representing 268 franchises in 17 states.
"Republic is moving aggressively to establish or round out automotive retail districts in key markets across the United States," said Steven Berrard, Republic's president and chief executive officer.
Berrard said the acquisitions would "add significantly" to their districts by eliminating inefficiencies in vehicle distribution and widening options for consumers.
The dealerships being acquired include:
First Team Automotive Corp., a 17-franchise operation based in Orlando Fla., with combined 1997 revenue of $540 million; Thomas Automotive Group, with 22 franchises in the Houston area; Chuck Clancy Ford, of Marietta, Ga.; and Star Motors in Fort Lauderdale, Fla., a single-point Mercedes-Benz dealership that reported revenue of $70 million in 1997.
The dealerships reported combined revenues of more than $1.3 billion in 1997.
Republic Industries' latest foray comes in the wake of several high-profile court battles over Toyota and Honda dealers in Texas and Alabama.
Last year, Toyota sued Republic in California, Arizona and Texas to prevent the company from acquiring more of its dealerships. Huizenga countersued Toyota for withholding consent to buy the dealerships.
Then, last July, Huizenga announced he would drop the suit in Texas because a new franchise law in that state, he said, ensured he could proceed unhindered. Under the law, a manufacturer would have to prove in court that a prospective owner either has "poor moral character" or lacks the financial wherewithall to take over a franchise.
The brinkmanship came to an abrupt end in August, when Huizenga and Toyota Motor Corp. announced they had reached an agreement allowing Republic to proceed apace in its acquisitions. Huizenga told CNN at the time that he had lined up the support of 23 state attorneys general.
A month later, a Federal court rejected a request by Honda for an injunction to stop Republic's unbridled expansion.
Ben Shim, an equity analyst with Deutsche Morgan Grenfell in New York, said Republic's latest move is in line with its corporate blueprint.
"They're basically doing what they said they would do," Shim said, noting that Republic had committed itself to generating $2 billion in new-car revenues.
Shim also played down the prospect of Honda posing a further challenge to Republic. Thomas Automotive Group sells Hondas and Acuras, among other makes.
"Honda's been more bark than bite," he said. "But this kind of franchise situation is going to be fought at the state level, because Honda really has nothing to hang its coat on right now."
Republic Industries was unchanged at 25-1/2 in mid-day trading Wednesday on the New York Stock Exchange.
When the economy flattens, as some analysts say may happen sometime this year, the automotive and retailing sectors are generally hit first and hardest.
--from staff and wire reports
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