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Lithia denies takeover talk

DeBoer insists it isn't vulnerable

Lithia Motors says it is not for sale, despite a report that the company is considering a possible merger with a large New York auto dealership.

The Medford-based dealership chain and United Auto Group held talks about some sort of combination, according to reports earlier this week in the Wall Street Journal.

Jeff DeBoer, the publicly-held company's vice president for finance and investor relations, would not discuss specifics of the Journal report, pointing out that it appeared in a rumor-mill feature called Heard on The Street.

He did say that Lithia, which has grown from five dealerships before it went public in late 1996 to 28, had no intentions of being purchased by anyone.

We are in an acquiring mode, DeBoer said Tuesday. We will always be the acquirer, we will not be acquired.

Lithia, whose stock-market value the Journal estimates at $180 million, is markedly smaller than United Auto Group, valued at $252 million and the nation's second largest publicly traded auto dealership.

Marshall Cogan, United's founder and chief executive officer, holds interests in a number of companies and the Journal says he is trying to shore up his debt-heavy empire.

As for the possibility of a hostile takeover, DeBoer said Lithia does not feel vulnerable.

We're the ones looking to acquire, he said. Usually, companies are bought out when they are in trouble and we are stronger than we've ever been.

Lithia's most recent acquisitions both closed this fall. The purchase of two Camp Automotive Inc. dealerships in Spokane, Wash., closed in October. Lithia's purchase of Hutchins Toyota in Springfield and Hutchins Nissan in Eugene closed in early November.

DeBoer said the company has announced no pending purchases but that the acquisition pipeline is full.

The Journal article quoted one analyst saying that companies like Lithia -- smaller consolidators snatching up dealerships -- are likely acquisition targets for larger firms.

United Auto's interest in Lithia, the article says, may revolve around debt problems at a third company, Trace. Trace is a holding company owned by Cogan.

Lithia's high price-to-earnings ratio, listed at 15.77 at Tuesday's close, also makes it attractive. Lithia finished Tuesday's trading at $15.75 per share, down $1.125. The company's stock price has fluctuated between $9.25 and $18.25 in the past year.

United Auto, which fell 43.75 cents Tuesday to $11.1875 a share, hasn't commented on the reported meetings.