Warren Buffett's Berkshire Hathaway Inc. has agreed to buy Phoenix-based, family controlled auto dealership Van Tuyl Group and use it to acquire other family dealerships nationwide,
the
Wall Street Journal
reported.
The
Journal
report said Van Tuyl is worth about $8 billion. Berkshire agreed to acquire it in an all-cash deal for an undisclosed price, the article said. The business was founded in Kansas City about 60
The new entity will be named Berkshire Hathaway Automotive. The
Journal
report pointed out that the dealership “can leverage Berkshire's other companies to provide car sales, financing and related services.” Berkshire Hathaway has a 2.1% stake in General Motors Co., and Geico, the car insurance company, is an indirect wholly owned subsidiary of Berkshire.
Jeff Rachor, Van Tuyl president, will become the new company's CEO. Larry Van Tuyl, son of Van Tuyl's founder and its controlling owner, will become chairman of the new Berkshire business, the
Journal
article said.
Rachor told the
Journal
that Berkshire Hathaway Automotive plans to acquire dealerships in the South and Midwest, where Van Tuyl already has stores.
The
Journal
article said: “In many ways, the Van Tuyl Group acquisition is typical of Mr. Buffett's deals: a family-owned business with strong prospects that is in the middle of a generational transition.” The report also noted that the Van Tuyl family's reputation and relationships with other auto dealers likely drew Buffett to the company.
“The high concentration of family ownership in the auto-retailing business means the industry remains highly fragmented, with publicly traded companies controlling only about 8% of the revenue,” the
Journal
report noted. The article said that retiring founders “have been cashing out and selling to bigger groups.” (Source:
Wall Street Journal
, Oct. 2, 2014.)
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