Auto-dealer chain backs out of massive $1 billion deal for luxury stores

Asbury Automotive Group Inc. is pulling the plug on one of the richest acquisitions of car dealerships in history and stocking up on cash instead.

The Duluth, Georgia-based retailer has delivered notice to Park Place Dealerships that it’s terminating the $1 billion, all-cash purchase pact they reached in December, according to a regulatory filing. Asbury will pay Park Place $10 million in damages.

Closely held Park Place owns 17 franchises mainly selling European luxury-brand vehicles including the Mercedes-Benz, Jaguar, Land Rover and Porsche brands. When Asbury announced plans for the acquisition late last year, Chief Executive Officer David Hult called Park Place “one of the best and most efficient operators of luxury stores in the industry."

The deal collapsed as the auto industry joined much of the rest of the U.S. economy in grinding to a halt to curb the spread of the coronavirus. Researcher IHS Markit said Wednesday it expects sales will plunge around the globe and recover slowly.

Asbury said in its filing that it has borrowed $237 million from a revolver and $110 million from its used-vehicle floor plan facility. As of Monday, the company had about $566 million in cash and assets on its balance sheet.