The outraged owner of Prime Automotive Group, which operates seven dealerships in Maine, sells the chain to a Texas-based company.
Group 1 Automotive Inc. of Houston issued a press release on Monday saying it had reached a deal to buy Prime Automotive from GPB Capital Holdings, a New York-based investment firm that has become the target of legal action by investors. and criminal allegations. Terms of the purchase contract were not disclosed.
GPB Capital has been at the heart of the controversy for years, capped in February when its chief executive was arrested and charged with fraud. However, Prime Automotive continued to operate successfully, the statement said, with its 30 dealerships generating $ 1.8 billion in revenue in 2020, selling more than 52,000 new and used vehicles.
Group 1 is a Fortune 500 auto retailer with 188 dealers in the United States, United Kingdom and Brazil, the statement said. It is a publicly traded company whose shares are sold on the New York Stock Exchange under the symbol GPI. The company is also heavily invested in selling cars online. via its website AcceleRide.com.
“Group 1 has been operating successfully in the Northeastern United States for many years. We are excited to have this opportunity to leverage our existing cost structure and further diversify our presence in the United States, ”said Earl J. Hesterberg, President and CEO of Group 1, in the release.
Prime Automotive operates 30 dealerships and three collision centers in the Mid-Atlantic and New England markets, including Prime Toyota, Prime Volkswagen, Prime Ford, Prime Chrysler Dodge Jeep RAM and Prime Honda, all in Saco.
In addition to fraud charges and lawsuits brought by investors, GPB Capital is pursued by David Rosenberg, whose late father, Ira Rosenberg, built a series of dealerships in Maine and then sold them to the investment firm in 2017.
David Rosenberg, who was originally appointed head of dealerships by the new owner, was fired after raising concerns about the financial transactions of GPB Capital and Prime Automotive. Rosenberg’s lawsuit alleges that GPB Capital did not buy back its stake in Prime Automotive as stated in its employment contract.
GPB Capital and its related entities also face lawsuits from a Texas law firm, which alleges the company defrauded investors of $ 1.8 billion; and the Commonwealth of Massachusetts, which said 180 state investors lost $ 14 million.
These lawsuits echo many of Rosenberg’s allegations. He said the parent company promised to pay investors out of profits, but instead used new investor money to pay those who put in money before. This way, he said, it worked like an illegal Ponzi scheme.
Toyota and Volkswagen both have threatened to revoke franchise agreements with their Saco-affiliated Prime Automotive dealers following alleged breaches of contract resulting from the eviction of David Rosenberg. The automakers have demanded that the dealerships be sold or that Rosenberg be reinstated as CEO.
In its announcement on Monday, Group 1 said the acquisition of Prime Automotive would allow it to expand its operations in the physical and digital areas.
“We are familiar with Prime markets and the opportunities they represent,” said Daniel McHenry, senior vice president and chief financial officer of Group 1, in the statement. “We are also proud to welcome the 1,800 employees of Prime Automotive as new teammates in the Group 1 family.”
Group 1 operates dealerships around Massachusetts and New Hampshire, but the acquisition of Prime Automotive would represent its first expansion in Maine.
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