DETROIT -- Penske Automotive Group Inc. has acquired an additional 5.5 percent interest in Penske Truck Leasing Co. from subsidiaries of GE Capital Global Holdings for approximately $239 million, the company said Thursday.
At the same time, Japanese trading house Mitsui & Co., the auto retailer's second-largest shareholder, acquired an additional 10 percent ownership interest in Penske Truck Leasing at the same valuation. After completion of these transactions, Penske Truck Leasing is owned 41.1 percent by Penske Corp., 28.9 percent by Penske Automotive Group and 30 percent by Mitsui.
During the third quarter of 2016, Penske Automotive had increased its ownership in Penske Truck Leasing to 23.4 percent from 9.0 percent.
By acquiring the additional 5.5 percent, Penske Automotive expects to realize earnings accretion, additional cash flow from tax savings and an increase in the annual cash distribution Penske Truck Leasing provides to its partners, the company said. It estimated the earnings accretion from the transaction would be 10 cents per share on an annualized basis.
Penske Automotive paid for the additional shares using liquidity on its U.S. credit agreement.
Penske Automotive Group, of suburban Detroit, ranks No. 2 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 249,695 new vehicles in 2016.
In its most recent quarterly earnings release, the company said Penske Truck Leasing, along with other equity income from joint-venture investments, accounted for 2 percent of revenue in the first half of 2017 but 14 percent of pretax earnings.
Penske Automotive's retail automotive operations accounted for 94 percent of revenue and 80 percent of pretax earnings, with retail commercial truck operations accounting for 4 percent of revenue and 6 percent of pretax profit.