(Reuters) -U.S. auto dealer Asbury (NYSE:ABG) Automotive Group said on Friday it would buy privately-owned Jim Koons Automotive for about $1.2 billion to increase its foothold in the Mid-Atlantic region.
Demand for vehicles has remained strong from consumers looking to snap up more SUVs and electric vehicles, prompting auto dealers to expand their operations and capitalize on the trend.
Jim Koons, which was founded in 1973, has 20 dealerships and 29 franchises in the United States and posted over $3 billion in revenue in 2022.
The transaction, which is expected to close latest by the fourth quarter, includes a valuation of $740 million for goodwill and nearly $417 million for real estate and leasehold improvements, Asbury said.
Asbury in a post-earnings call in July said that it would "continue to aggressively pursue acquisitions that would be accretive."
Koons dealerships' profitability is expected to be generally in line with that of Asbury's dealerships, the Duluth, Georgia-based company said.
It added that it would use its existing cash balance and credit facility to fund the transaction.