The pace of acquisitions for publicly held Penske Automotive Group has returned to pre-debt-crisis levels.
Penske, the nation’s second-largest auto retailer based on new units retailed, acquired seven franchises in the first half of 2011 that will give the company an additional $525 million in annual revenue.
CEO Roger Penske told analysts during the company’s second-quarter earnings call that there are more deals in the pipeline and that he has “plenty of dry powder” to purchase more dealerships.
The growth in the first six months of the year alone is five times what it was in the previous two years.
In 2010, Penske added $120 million in annual revenue through acquisitions, and in 2009 the company added $100 million.
The pace is about what it was prior to the recession, when the retailer added $450 million in 2007 and $500 million in 2008.
And the purchase prices are healthy.
In the second quarter, Penske purchased Crevier BMW and Mini in Santa Ana, Calif., and Mercedes-Benz of Greenwich in Greenwich, Conn. Penske told analysts the company paid six times net pretax earnings for the blue sky, or intangible assets.
First addition, Crevier BMW was ranked as the fifth largest new-unit BMW dealership in the United States and the largest Certified BMW pre-owned dealership in the western region. The BMW dealership is a six-time winner of BMW’s Center of Excellence award, most recently in 2010. Crevier MINI was ranked as the 7th largest MINI dealership in the United States based on new vehicle sales in 2010.
Last week acquisition was, Mercedes-Benz of Greenwich is a Mercedes-Benz dealer serving the Connecticut areas of Greenwich, Stamford, and Norwalk, offering an unparalleled selection of new and used Mercedes cars, world-class service, and attention to detail. Mercedes-Benz of Greenwich has become and maintained its position as the largest and most successful exclusive Mercedes-Benz franchise in New England and has been recognized for both sales excellence and customer satisfaction. “I’m pleased to expand our presence in Connecticut with the Mercedes-Benz brand,” said East Region Executive Vice President Bernie Wolfe. “For over fifty years, Mercedes-Benz of Greenwich has been serving customers in Greenwich, Stamford and Norwalk with a dedication to customer service and satisfaction. We look forward to implementing the Mercedes-Benz Autohaus facility program in this important market and to growing the overall business to this market’s full potential.”
Tony Pordon, Penske’s senior vice president, said that before the economy cratered in 2009, premium luxury stores typically fetched five to seven times net pretax earnings.
Penske told analysts the company will be “opportunistic” in its approach to acquisitions and look to strengthen its presence in existing markets.
Net income in the second quarter rose to $39.6 million or 43 cents a share compared with $29.4 million or 32 cents a share a year earlier. Revenue rose 10.5 percent to $2.9 billion.
Penske operates 327 auto retail franchises.
