Houston group buys Prime Automotive, including Maine car dealers, as lawsuit is settled
Houston-based Group 1 Automotive (NYSE: GPI) has acquired 27 Prime Automotive dealerships in the Northeast, including six in Maine, for $880 million.
The deal closed on Wednesday as Prime Automotive’s former CEO David Rosenberg settled a lawsuit against his former employer for $30 million, according to media reports.
Group 1 also acquired three collision centers, including one in Maine.
"We are pleased to add these great brands and new teammates to our company," said Earl Hesterberg, Group 1's president and CEO. "This action will further leverage our cost structure, diversify our footprint, and broaden our customer base."
So far this year, Group 1 has completed transactions representing $2.4 billion of acquired annual revenues, growing its portfolio by 57 franchises. The company currently owns 217 automotive dealerships, 287 franchises, and 52 collision centers in the United States, the United Kingdom and Brazil that offer 34 brands of automobiles.
The settlement with Rosenberg ends years of controversy at Prime Automotive.
Rosenberg’s late father, Ira Rosenberg, founded the Prime Motor Group dealership chain in Maine. It became part of Massachusetts-based Prime Automotive in 2017. David Rosenberg became CEO of the expanded company.
Rosenberg quickly alleged that he uncovered financial misdeeds and asserted that the parent investor group was running a Ponzi scheme by using new investment money to pay returns to existing investors.
Rosenberg exercised an option that allowed him to sell the rest of his shares to the company. The company fired Rosenberg. When the company failed to make a payment on Rosenberg’s shares, he filed suit in Massachusetts in 2019.
Three executives connected to Prime Automotive’s parent company, New York-based investment firm GPB Capital Holdings, were arrested in February and charged with wire fraud and securities fraud.
Meanwhile, some car manufacturers, including Toyota and Volkswagen, had threatened to pull their franchise agreements with the company unless the dealerships were sold or Rosenberg was reinstated.
Prime Automotive put the dealerships on the market this summer and the deal with Group 1 was forged in September.
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