The aggressive acquisition spree by AutoCanada Inc. will push Canada’s largest publicly traded auto dealership company into Calgary for the first time with the purchase of Courtesy Chrysler Dodge.
“Courtesy Chrysler is a premier, high-volume Chrysler dealership and we are fortunate to be able to welcome the Courtesy Chrysler family to the AutoCanada family,” AutoCanada chief executive officer Pat Priestner said in a statement Monday announcing the deal.
Calgary is a new market for Edmonton-based AutoCanada, which operates large Chrysler stores in its home city as part of the 30 dealerships it owns and operates, mainly in Western Canada.
Courtesy is a 45-year-old dealership that sold 934 new vehicles and 561 used vehicles in 2012, which helped generate revenue of $68-million, making it the largest purchase AutoCanada has made since it went public.
The Calgary dealership has been in a legal battle with Chrysler Canada Inc., which wants to open a new dealership in the southern part of the city, which would be the auto maker’s eighth outlet in Calgary.
The Courtesy acquisition follows the purchase of stores in Winnipeg and Grande Prairie, Alta., earlier this year and the company’s announcement last week that it plans to buy six to nine additional dealerships during the next 24 months.
The deal will be financed through a bought deal with a syndicate of underwriters that will buy 1.6 million AutoCanada treasury shares and resell them to investors. That share offering will raise $40-million, which will cover the cost of the acquisition and pay down part of the company’s debt. The price of the purchase was not disclosed.
In addition, Canada One Auto Group Ltd., which is AutoCanada’s largest shareholder and a company 80-per-cent owned by Mr. Priestner, will issue 2.5 million shares in a secondary offering to the underwriting syndicate, which will raise an additional $62.5-million.
Procees from the secondary offering will be used to repay debt under the company’s revolving line of credit, which will permit further acquisitions, Tom Orysiuk, AutoCanada president said Monday.
As part of deal with General Motors of Canada Ltd., AutoCanada is permitted to operate some GM stores, but Mr. Priestner is obliged to own a minimum of 15 per cent of the dealerships and maintain 100 per cent voting control.
“The proceeds will also provide enhanced capacity for Mr. Priestner to participate with AutoCanada should opportunities develop to acquire dealer groups that include brands that currently do not accept public ownership,” AutoCanada said in a statement.