Group 1 Automotive to Buy Brazilian Car Dealer

On Friday, used-and-new car dealer Group 1 Automotive (NYSE: GPI  ) announced that it has entered into a definitive agreement to purchase all outstanding shares of Brazil's UAB Motors Paricipacoes in a stock-and-cash transaction worth approximately $145 million, or a bit over $200 million inclusive of UAB's $62 million in net non-floorplan debt.

Specifically, Group 1 will exchange 1.45 million of its own shares, plus $47.4 million in cash, for the target's shares.

Buying UAB, Group 1 will acquire two Toyota, four Nissan, two BMW, two BMW/Mini, three Renault, three Peugot, one Land Rover, and one Land Rover/Jaguar dealership -- 18 shops in all -- distributed among the Sao Paulo market and several other "key metropolitan markets" in the neighboring state of Parana. Group 1 estimates that the annual revenues generated by these businesses will be $650 million.

This results in a price-to-sales ratio of about 0.22 on the purchase, roughly equivalent to Group 1's own 0.2 P/S ratio. Group 1 additionally notes that the acquisition will be "modestly accretive" to earnings in 2013, adding anywhere from $0.03 to $0.05 per share, pro forma. The transaction is expected to close on or about Feb. 28.

Group 1 shares are down 0.7% on the news, at $67.24.


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