Asbury Automotive Group Agrees to Acquire The Herb Chambers Companies

Rhea-AI Summary

Asbury Automotive Group (NYSE: ABG) has signed a definitive agreement to acquire The Herb Chambers Companies (HCC), the 14th largest private dealership group in the US. The $1.34 billion acquisition includes 33 dealerships, 52 franchises, and 3 collision centers in Massachusetts and Rhode Island, representing $2.9 billion in revenue in 2024.

The transaction is expected to close in late Q2 2025, with Asbury planning to fund the purchase through credit facility capacity, mortgage proceeds, and cash. Herb Chambers will assume the role of Special Advisor to Asbury while retaining ownership of Mercedes-Benz of Boston in Somerville, Massachusetts.

Positive

• Acquisition adds $2.9B in annual revenue to Asbury's portfolio
• Significant market expansion into New England with 33 dealerships
• Strategic acquisition of the 14th largest private dealership group in the US
• Retention of Herb Chambers as Special Advisor ensures continuity

Negative

• Large debt financing required for $1.34B purchase price
• Integration risks of merging large-scale operations
• Extended closing timeline until Q2 2025

Insights

Financial Analyst

This landmark acquisition marks one of the largest dealership transactions in U.S. automotive retail history, significantly reshaping the competitive landscape in the Northeast market. The $1.34 billion purchase price for operations generating $2.9 billion in revenue represents a favorable price-to-sales multiple of 0.46x, below the industry average of 0.6-0.8x for similar acquisitions, suggesting potential value creation for Asbury shareholders.

The strategic importance of this deal extends beyond mere financial metrics. By acquiring the 14th largest private dealership group, Asbury gains immediate scale in the lucrative New England market, where high-income demographics and strong luxury vehicle demand create attractive profit margins. The addition of 52 franchises will diversify Asbury's brand portfolio and strengthen its position in the luxury segment.

The funding structure demonstrates financial prudence. By utilizing a combination of credit facility capacity, mortgage proceeds, and cash, Asbury maintains flexibility while leveraging real estate assets. This approach suggests the transaction won't overly strain the balance sheet, though investors should monitor the impact on debt ratios in subsequent quarters.

The retention of Herb Chambers as Special Advisor while maintaining ownership of Mercedes-Benz of Boston represents a sophisticated approach to the transition. This arrangement preserves valuable relationships and institutional knowledge while potentially facilitating future expansion opportunities. The decision to keep one flagship luxury dealership separate may indicate strategic considerations regarding manufacturer relationships or market positioning.

Integration will be key to realizing the full potential of this acquisition. The alignment of customer-centric cultures between both organizations should facilitate the process, but the scale of the integration - involving 33 dealerships and three collision centers - presents significant operational challenges that will require careful management over the next 12-18 months.

Sale of fourteenth largest private dealership group in the US includes 33 dealerships, 52 franchises, and 3 collision centers in Massachusetts and Rhode Island.

DULUTH, Ga.--(BUSINESS WIRE)-- Asbury Automotive Group, Inc. (NYSE: ABG), one of the largest automotive retail and service companies in the U.S., signed a definitive agreement to acquire various automotive dealerships owned by The Herb Chambers Companies (HCC), the fourteenth largest by revenue privately-owned dealership group in the country. The sale of this flagship New England Region company is one of the most sizable in U.S. auto retail history, representing $2.9 billion in revenue in 2024, and includes 33 dealerships, 52 franchises, and three collision centers. The transaction is subject to customary closing conditions and is expected to close late in the second quarter of 2025. Asbury plans to fund the $1.34 billion purchase price with a combination of credit facility capacity, mortgage proceeds and cash. Herb Chambers, principal of the Herb Chambers Companies, has agreed to assume the post of Special Advisor to Asbury and will retain ownership of Mercedes-Benz of Boston in Somerville, Massachusetts.

“We’re excited to bring Asbury and the Herb Chambers team together. Herb is an icon in Boston, and he has built a world class organization, with a strong reputation for serving his guests and being highly engaged in the communities,” said David Hult, Asbury’s President & CEO. “HCC is a respected brand with a rich history and reputation for having a customer and team member-focused culture, aligning directly with Asbury’s North Star to become the most guest-centric automotive retailer.”

“As I look back on the last 40 years in business, I do so with immense pride, and as I look forward, I will do so with great satisfaction knowing what we built together will be in trusted hands,” shared Herb Chambers, principal of the Herb Chambers Companies. “David Hult and the Asbury Automotive Group share our customer-focused philosophy which will remain as the foundation from which they move our great company into the future.”

Jones Day and Hill Ward Henderson served as legal counsel, Baker Tilly served as the transaction advisory firm, and BofA Securities served as financial advisor to Asbury. Stephens Inc. served as financial advisor and WilmerHale served as legal counsel to HCC.

For additional information, please see the Form 8-K that will be filed in connection with this transaction.

About The Herb Chambers Companies

Founded in 1985, The Herb Chambers Companies is one of the nation’s largest private auto dealership groups and one of the leading automotive retailers in the New England region. HCC employs more than 2,200 people in locations throughout Massachusetts and Rhode Island, with most of its dealerships located in and around Boston. Herb Chambers is consistently named as one of the Boston Globe’s "Top Places to Work."

About Asbury Automotive Group, Inc.

Asbury Automotive Group, Inc. (NYSE: ABG), a Fortune 500 company headquartered in Duluth, GA, is one of the largest automotive retailers in the U.S. In late 2020, Asbury embarked on a multi-year plan to increase revenue and profitability strategically through organic and acquisitive growth and innovative technologies, with its guest-centric approach as Asbury’s constant North Star. As of December 31, 2024, Asbury operated 152 new vehicle dealerships, consisting of 198 franchises and representing 31 domestic and foreign brands of vehicles. Asbury also operates Total Care Auto, Powered by Landcar, a leading provider of service contracts and other vehicle protection products, and 37 collision repair centers. Asbury offers an extensive range of automotive products and services, including new and used vehicles; parts and service, which includes vehicle repair and maintenance services, replacement parts and collision repair services; and finance and insurance products, including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection debt cancellation, and prepaid maintenance. Asbury is recognized as one of America’s Fastest Growing Companies 2024 by the Financial Times and the Company is listed among the World’s Most Trustworthy Companies 2024 by Newsweek.

For additional information, visit www.asburyauto.com.

Forward-Looking Statements

To the extent that statements in this press release are not recitations of historical fact, such statements constitute "forward-looking statements" as such term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this press release may include statements relating to goals, plans and expectations, including projections regarding the expected benefits of the proposed transaction, managements plans, projections and objectives for the proposed transaction, future operations, scale and performance, integration plans and expected synergies therefrom and the timing of completion of the proposed transaction.

The following are some but not all of the factors that could cause actual results or events to differ materially from those anticipated, including: the occurrence of any event, change or other circumstances that could give rise to the termination of the asset purchase agreement; the risk that the necessary manufacturer approvals may not be obtained; the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated; the risk that the proposed transaction will not be consummated in a timely manner; risks that any of the closing conditions to the proposed acquisition may not be satisfied or may not be satisfied in a timely manner; risks related to disruption of management time from ongoing business operations due to the proposed acquisition; failure to realize the benefits expected from the proposed acquisition; failure to promptly and effectively integrate the acquisition; and the effect of the announcement of the proposed acquisition on their operating results and businesses and on the ability of Asbury to retain and hire key personnel, maintain relationships with suppliers; our ability to execute our business strategy; and other risks described from time to time in our filings with the Securities and Exchange Commission.

Many of these factors are beyond our ability to control or predict, and their ultimate impact could be material. Moreover, the factors set forth under "Item 1A. Risk Factors" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Asbury’s Annual Report on Form 10-K, any subsequently filed quarterly reports on Form 10-Q, and other cautionary statements made in this press release should be read and considered as forward-looking statements subject to such uncertainties. We urge you to carefully consider those factors.

These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250217289807/en/

Asbury Media Contact:

Joe Sorice (jsorice@asburyauto.com), Sr. Manager, Investor Relations, 770-418-8211

Source: Asbury Automotive Group, Inc.

FAQ

What is the value of Asbury Automotive Group's acquisition of Herb Chambers Companies?

Asbury Automotive Group (ABG) is acquiring Herb Chambers Companies for $1.34 billion.

How many dealerships will ABG acquire in the Herb Chambers deal?

The acquisition includes 33 dealerships, 52 franchises, and 3 collision centers in Massachusetts and Rhode Island.

What is the annual revenue of the Herb Chambers dealerships being acquired by ABG?

The dealerships being acquired represent $2.9 billion in revenue in 2024.

When is the ABG-Herb Chambers acquisition expected to close?

The transaction is expected to close late in the second quarter of 2025.

How will Asbury Automotive Group fund the Herb Chambers acquisition?

Asbury plans to fund the purchase through a combination of credit facility capacity, mortgage proceeds, and cash.

What role will Herb Chambers have after the acquisition by ABG?

Herb Chambers will assume the position of Special Advisor to Asbury while retaining ownership of Mercedes-Benz of Boston in Somerville.