Republic to Purchase 3 Local Dealer Groups

Republic Industries Inc. has agreed to buy three franchise car dealership groups in Southern California, including the region’s largest sellers of Mercedes-Benz and Jeep vehicles. The deals, among six separate transactions announced Friday, would make Republic one of the largest car retailers in Southern California.

With the acquisitions, Republic’s local holdings will increase to 11 franchises and 50 locations, said Jim Donahue, vice president of communications for Republic.

The Fort Lauderdale, Fla.-based company, whose chairman is billionaire Wayne Huizenga, is the world’s largest retailer of cars and trucks. Republic said the businesses will be bought mostly with cash and will add about $650 million in annual revenue. Terms of the transactions were not disclosed.

The California groups are Mercedes-Benz dealer House of Imports of Buena Park, Don-A-Vee Jeep-Eagle of Bellflower and Placentia, Corona Chevrolet of Corona and Beach City Chevrolet of Long Beach. Republic will also acquire franchise groups in Las Vegas, Phoenix and Dayton, Ohio.

“California is Republic’s bellwether state because it’s where automotive trends are set,” said Sheldon Sandler, a managing director at Bel Air Partners, a Princeton, N.J.-based investment firm focused on the auto industry. “It’s a point of pride to be dominant there.”

The agreements come two weeks after Republic said planned acquisitions will help boost annual revenue by $8 billion next year. The company had $10.3 billion in revenue in 1997.

Republic’s strategy is to make each car sale more profitable by slashing advertising and other expenses through consolidation with its AutoNation used-car stores. In the last two years, Republic has transformed itself from a waste-handling company into a chain of about 350 car dealerships.

In Don-A-Vee, Republic is acquiring the largest-volume Jeep dealer in California for the last 11 years.

The House of Imports acquisition will give Republic the nation’s largest Mercedes-Benz dealer as measured by number of new vehicles sold.

But House of Imports has recently slipped to become second to archrival Fletcher Jones Motorcars of Newport Beach in terms of dollar volume, according to the September issue of Ward’s Dealer Business, a trade journal that compiles and publishes annual rankings.

Garth Blumenthal, general manager of Fletcher Jones, said the Republic deal will prove favorable for his dealership.

“We believe that the personalized attention we give our customers in-house, and a hands-on approach, makes a difference,” as opposed to the service offered by a corporate-owned facility, he said.

But House of Imports General Manager Ray Beshoff said the name and service will remain the same.

“I think the benefits to the consumer will be very positive with some of the cost-saving measures that Republic Industries will bring to the dealership,” he said. “We have been No. 1 in the nation for many years. [The agreement] will assist us in maintaining that position.”

So far, Republic’s Donahue said, consumers have not felt the impact of the consolidations.

“For the consumer, we hope it changes nothing,” he said, noting that the goal is “not to come and make wholesale changes.”

Republic President and Chief Executive Steven R. Berrard said in a statement that the company plans to make additional acquisition announcements in the near future.

Bel Air Partners’ Sandler said the company is determined to dominate market share in “focus” areas such as Southern California and Las Vegas.

“They’re employing an Attila the Hun strategy,” Sandler said. “Submit or be conquered.”

In July, Republic raised $1.4 billion when it completed its initial public offering of Republic Services, its waste-management business. The company has said it expects to spin off its remaining stake in that unit to shareholders in the first half of next year.

Republic shares had fallen 51% from a 52-week high of $35.88 on Oct. 7 to close at a 52-week low Thursday at $17.56. They rose 19 cents on Friday to close at $17.75 on the New York Stock Exchange.

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Times staff writer Susan Abram and Bloomberg News contributed to this report.