NEW YORK Lithia Motors Inc said on Sunday it has agreed to buy DCH Auto Group Inc for $362.5 million, giving the automotive retailer a presence in the eastern United States for the first time.
DCH Auto Group's 27 dealerships sell new and used vehicles in Southern California, New Jersey and New York, and the purchase is expected to increase Lithia's 2014 earnings by about 12 cents to 14 cents per share, excluding acquisition costs, and by 65 cents to 75 cents on an annualized basis, Lithia said in a press release.
Oregon-based Lithia Motors, which calls itself the eighth biggest U.S. automotive retailer with 101 stores, will acquire 100 percent of DCH Auto Group's outstanding shares for $340 million in cash and $22.5 million in shares. Lithia had a market value of $2 billion as of the end of trading on Friday, and has 101 stores in the Western United States.
"For the past several years, we have been seeking a strategic partner to help us to enter the Eastern United States," Lithia President and Chief Executive Bryan DeBoer said in the statement.
The acquisition is expected to close in the fourth quarter of 2014 and is subject to customary approvals. The DCH stores will keep their name and current management team with DCH President George Liang to report directly to DeBoer. DCH founder Shau-wai Lam is expected to join the Lithia board after the transaction is completed, DCH said in a statement.
(Reporting by Marcy Nicholson)