Sonic completes $700M acquisition of RFJ Auto Partners

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Sonic Automotive Inc. has completed what CEO David Smith has called the group’s largest acquisition ever with its $700 million purchase of RFJ Auto Partners Holdings Inc.

The acquisition, which was revealed in September and closed on Monday, includes 22 franchised dealerships across Texas, Idaho, Washington, New Mexico, Missouri and Indiana. The deal also included 11 used-only stores in Washington, Idaho and Montana.

Sonic, of Charlotte, N.C., said the transaction is expected to add $3.2 billion in annual revenue.

“RFJ Auto’s geographic footprint, brand portfolio and proprietary processes complement our existing business model and align with our strategy to continue driving growth in our franchised dealership business,” Sonic President Jeff Dyke said in a statement.

RFJ Auto, based in Plano, Texas, formed in February 2014 when automotive retail veteran Rick Ford partnered with Jordan Co., a New York private equity firm.

RFJ Auto’s brand portfolio is made up of Alfa Romeo, Chrysler, Dodge, Jeep, Ram, Maserati, Chevrolet, GMC, Buick, Lexus, Toyota, Ford, Nissan, Hyundai, Honda and Mazda.

Sonic said the deal adds six new states to its footprint: Idaho, Indiana, Missouri, Montana, New Mexico and Washington. Mazda is a new brand to Sonic’s automaker portfolio.

The public group now has 111 new-vehicle dealerships.

RFJ Auto ranked No. 42 on Automotive News‘ most recent list of the top 150 dealership groups based in the U.S., with retail sales of 19,705 new vehicles and 28,448 used vehicles in 2020. The group generated revenue of $2.8 billion last year.

Sonic ranks No. 7 on the list, retailing 93,281 new vehicles and 159,025 used vehicles in 2020 and generating revenue of $9.8 billion.

Rick Ford is staying on with Sonic as head operator of the RFJ Auto platform. Ford was a Sonic regional vice president earlier in his career and first met Dyke when they both worked at AutoNation Inc.

“I’m personally excited to be rejoining the Sonic family, working alongside David, Jeff and the Sonic team to continue delivering an exceptional experience to consumers across the country,” Ford said in a statement.

One RFJ dealership, Big Spring Ford in Texas, was not part of the sale to Sonic, Ford told Automotive News in an email, noting that the group already had a deal for it. Ford said that transaction will likely close in first quarter 2022.

Investment bank Lazard was Sonic’s financial adviser in the transaction, while investment bank Cowen was RFJ Auto’s financial adviser.

In October, Sonic closed on a private offering of $1.15 billion in senior debt notes due 2029 and senior notes due 2031.

The company said it planned to use proceeds from the offering, combined with other debt, to fund the RFJ Auto acquisition as well as to redeem outstanding senior notes due 2027 and pay related fees and expenses.

The transaction is the second megadeal to close in recent weeks. Group 1 Automotive Inc. acquired most of Prime Automotive Group on Nov. 17.

Asbury Automotive Group Inc. plans to buy Larry H. Miller Dealerships and its 54 new-vehicle stores by year-end.

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