LMP to terminate pending dealership acquisitions, discover sale of firm

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LMP Automotive Holdings Inc. is planning to terminate its seven pending purchases of quite a few auto dealerships and is contemplating a sale of the corporate.

“The corporate intends to terminate all of its pending acquisitions in accordance with the phrases of their respective acquisition agreements, primarily as a result of incapability to safe monetary commitments and shut inside the time frames set forth in such agreements,” LMP CEO Samer Tawfik mentioned in an announcement.

The small, publicly traded auto retailer, in a news release on Wednesday, mentioned its board of administrators feels its inventory value is undervalued. Shares of LMP closed at $6.65 on Tuesday. The shares plunged 16 % to $5.59 in noon buying and selling.

A 12 months in the past, the shares had been buying and selling for greater than $20.

Inventory had been a part of LMP’s technique to assist pay for not less than a few of its pending acquisitions.

“Given the file M&A exercise in our sector and multiples being paid for these transactions, LMP’s board of administrators has directed administration to right away pursue strategic alternate options, together with a possible sale of the corporate,” Tawfik mentioned within the assertion.

This week, Automotive Information reported {that a} vendor in a single deliberate deal stored a $1.5 million deposit after that deal fell by way of on Jan. 31. It marked the newest transaction to break down for the Fort Lauderdale, Fla., firm.

Final 12 months, LMP acquired its first franchised dealerships and entered into a number of contracts to purchase further dealerships. In 2020, the then-used-vehicle and automobile subscription retailer announced aspirations to roll up dozens of dealerships. It has eight franchised dealerships and 4 used-vehicle shops in its portfolio.

“Among the massive public firms are making very substantial acquisitions, and that tends to affect traders, however on this case they by no means actually had the capital base to be as aggressive as they had been,” mentioned Sheldon Sandler, CEO of Bel Air Companions, a buy-sell advisory agency in Hopewell, N.J., which has written about LMP and isn’t concerned in any transactions with the corporate.

Sandler mentioned firms usually wish to reveal to traders that they’re rising, however additionally they have to have the mandatory capital to help that development.

“LMP by no means had entry to the capital to maintain their development,” he mentioned. “Their money circulation was insufficient to cowl the price of their development.”

This month, LMP mentioned it anticipated in February that it could start to shut “considerably all” its pending offers.

These contracts, a few of which date again to March 2021, embrace shopping for:

  • An 85 % stake in Central Avenue Chrysler-Jeep-Dodge-Ram in Yonkers, N.Y.
  • Tom Peacock Cadillac and Tom Peacock Nissan in Houston
  • Kia of East Hartford in Connecticut
  • Zappone Chrysler-Jeep-Dodge-Ram in Clifton Park, N.Y.
  • Chantz Scott Chrysler-Dodge-Jeep-Ram in Greeneville, Tenn.
  • Yonkers Kia in New York
  • An 85 % stake in 10 new-vehicle dealerships in Florida, a used-car middle and a fleet operations outlet from the Alan Jay Automotive Community

In late December, Tawfik said in a news release that LMP had “engaged Financial institution of America” to assist it refinance debt, and this month he mentioned in one other launch that LMP was working with “potential lenders to supply the mandatory debt financing to consummate these acquisitions.”

“That is nonetheless one of many busiest occasions in M/A historical past,” mentioned Dave Cantin, CEO of the Dave Cantin Group and whose DCG Acquisitions agency is representing two sellers in pending transactions with LMP. “With latest historic earnings, all sellers concerned in one in all LMP’s transactions will hopefully discover a new appropriate purchaser that has a capability to execute a profitable closing.”

Lindsay VanHulle contributed to this report.

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