Dell Drives Into Luxury Auto Market
MSD Capital teams with auto retail exec Jeffrey Rachor to launch new venture.
May 9, 2008
MSD Capital, the New York private equity investment firm of Michael Dell and his family, is interested in luxury cars.
More specifically, the firm is aiming to back the acquisition and operation of luxury car dealerships across the US through a newly launched venture named MSD Automotive Partners. The firm said late Thursday it has teamed up with Jeffrey Rachor, formerly chief executive of Philadelphia retail chain Pep Boys – Manny, Moe & Jack, to invest in premier car dealerships. Rachor formally left the auto accessories and parts retailer in April to serve as CEO of Chattanooga, Tenn.-based MSD Automotive.
Howard Berk, a partner at MSD Capital Partners, said of the new venture: “Having spent several years evaluating the dealership space, we at MSD are thrilled to partner with Jeff in this new venture.”
MSD Capital officials did not immediately return calls.
Rachor, who served as CEO of Pep Boys since March 26, 2007, has built a 27-year career operating companies in the automotive retail space, like Sonic Automotive, where he served as president prior to joining Pep Boys, the nation’s third largest automotive products supplier.
He said MSD Automotive Partners will be built “at a measured pace, to ensure that we’re fully aligned with our auto manufacturer partners and other key constituents.”
Meanwhile, at Pep Boys, chief operating officer Mike Odell has taken up the reins of CEO as an interim post.
Rachor and Pep Boys’ management team announced the launch of a new five-year strategic plan in November 2007. As part of the plan, the company closed 31 underperforming locations, as well as a 34-store sale-leaseback transaction out of which it repaid $162.5 million of senior debt, and began reorganizing its inventory.
Pep Boys isn’t exactly a small operation, since its manages some 562 stores, comprised of 552 big box locations, averaging 20,700 square feet and stocking 22,000 items.
The Pennsylvania company generated $2.1 billion in revenues for fiscal 2007, a 4.7% decrease from its prior year fiscal revenues of $2.2 billion, according to its latest annual report.
Shares of Pep Boys, which has a market capitalization of $469 million, traded at a range of $8.25 a share to $22.49 per share on the New York Stock Exchange.
For more information on related topics, visit the following:
