• Lithia Motors goes coast-to-coast with purchase of 27 dealerships

    Medford car seller to buy DCH Auto Group and dealerships in SoCal and on East Coast
  • Lithia Motors announced Sunday a $362.5 million dealership acquisition that will open up metropolitan markets on the East Coast and Southern California.
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  • Lithia Motors announced Sunday a $362.5 million dealership acquisition that will open up metropolitan markets on the East Coast and Southern California.
    The Medford-based company with 101 stores has entered into a deal to acquire New Jersey-based DCH Auto Group Limited, which has 27 stores.
    Sid DeBoer, chairman of Lithia, said it was the single largest acquisition in Lithia's history.
    "I think it may be one of the single biggest acquisitions in the sector," DeBoer. "Now, we have a whole number of people who will help us grow into the East."
    DeBoer said the purchase, which should close in the fourth quarter of this year, is expected to increase earnings per share by about 12 cents to 14 cents. Next year's EPS should increase by 65 cents to 75 cents, he said.
    DCH, which generates $2.3 billion in sales annually, operates 14 stores in Southern California and 13 stores in New Jersey and New York, offering primarily foreign brands.
    Honda makes up 44 percent of the DCH sales; Toyota, 30 percent; BMW, 5 percent; Acura, 4 percent; Nissan, 3 percent; Lexus, 3 percent; Audi, 2 percent; and Kia, 2 percent.
    DeBoer said the DCH name will not be changed to Lithia. In fact, he said he anticipates DCH, which is a widely recognized name in its market areas, will increase its dealerships over time.
    DeBoer said he has been familiar with the Chinese owners of DCH for many years.
    The DCH stores will continue to be led by the current management team, with George Liang, DCH's president, reporting directly to Bryan DeBoer, Lithia's president and CEO. After the transaction is completed, it is expected that Shau-Wai Lam, DCH's founder, will join the Lithia Board of Directors.
    Lithia, which calls itself the eighth biggest U.S. automotive retailer, 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 at the end of trading on Friday, with its stock trading at $76.68 a share.
    DeBoer said DCH competes in more metro areas than Lithia and has a lower profit margin on each car.
    "They do high volume in cities," he said.
    Lithia has specialized in selling cars in small- to medium-sized markets. The company sells 28 brands of new vehicles and all brands of used vehicles in 12 states.
    DeBoer said the acquisition of DCH will likely bump his company up a notch on the top 10 list.
    Lithia expects to incur pre-tax costs associated with the acquisition of approximately 4 cents to 6 cents per share in 2014.
    Earlier this month, Lithia announced it was purchasing two dealerships in the Portland area but also sold a Mercedez-Benz dealership.
    In April, Lithia acquired a Ford dealership in Corpus Christi, Texas, and opened a Chrysler, Jeep and Dodge dealership in in Wasilla, Alaska.
    Reach reporter Damian Mann at 541-776-4476, or email dmann@mailtribune.com.
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