The Hart-Scott-Rodino (HSR) Act requires that parties notify the FTC and the Department of Justice of most large transactions that affect commerce in the United States. After doing so, parties must observe a waiting period before closing their transaction, while one of the two agencies determines whether the transaction may result in a substantial lessening of competition. (It's a monopoly watchdog.) Last week, the FTC announced (via Twitter) that an early termination of the waiting period has been granted for Fortune 500 company Group 1 Automotive Inc. The third largest dealership group in the US (141 dealerships, 179 franchise and 35 collision centers) has its M&A eye on the family owned, second-generation Mortiz Dealerships of Arlington, TX. Mortiz Dealerships sell mostly Cadillacs and BMWs. Estimated annual revenue: $100-$500 million. Group 1’s annual revenue (in 2012): $7.48 billion.
The FTC may have truncated the waiting period because Group 1 is obviously in a hurry. In January 2013, Group 1 bought Brazilian automotive retail firm UAB Motors Participacoes S.A. for about $146 million, to expand into Brazil’s fast growing market. In October, Group 1 executives said “costs to terminate about 50 employees at its Brazilian operations as well as Brazil’s poor economy and low consumer confidence dragged down Group 1’s results.” The company's CEO, Earl Hesterberg (a former Ford exec), said he remains optimistic about US sales growth. “Half our business is in Texas and Oklahoma.”
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