As its discredited former owner looked on, agents of billionaire Wayne Huizenga won a Bankruptcy Court auction Tuesday to buy the Magic Ford and Magic Lincoln-Mercury dealerships in Valencia with a lower-than-expected outlay of about $21 million.
Huizenga's Republic Industries, whose rapid-fire acquisitions are roiling the auto retailing industry nationwide, bid $15.86 million in the three-minute contest against only one other bidder. It will also pay about $5 million to assume related assets and is expected to take over ownership of the dealerships by the end of this month or early next.
The sale marks Huizenga's first entry into the California auto market. Republic already owns several used-car superstores along with dealerships in Ohio, Florida and Arizona. He also acquired Alamo Rent A Car and this week announced plans to buy National Car Rental.
The sale also marks a closing chapter in the car business for Norman Gray, 53, who opened Magic Ford in 1978 and built it into the fifth-largest Ford dealership in the country. But in September Gray's dealership fell into bankruptcy. His biggest creditor, Ford Motor Credit Co., said Gray had looted the business and stashed $1.8 million in a secret bank account.
Gray, a colorful figure, has a reputation as both a philanthropist and a big gambler on horses and in Las Vegas. Ford Motor Credit Co. is owed more than $20 million. Gray was at the standing-room-only auction at Bankruptcy Court in Woodland Hills. His attorney Leonard Schulman said before the auction that the dealerships needed to sell for about $24 million to pay off Gray's debts and expenses from the dealerships.
After the auction, Gray was asked if he was disappointed with the outcome. "I don't have any comment," he said as he left the building.
Thomas Butler, Republic's vice president of corporate development, said the company was eager to win the auction because "California will be an important market for us." He also said Republic might buy other dealerships in the state. Butler said Republic will keep the Magic Ford name.
Huizenga, who Forbes magazine says is worth $1.4 billion, made his fortune in garbage collection and by building the Blockbuster video chain, which he sold to Viacom for $8.4 billion in 1994. He also owns the Florida Marlins and the Miami Dolphins professional sports clubs.
Republic faced only one other bidder, Grapevine Motors Inc., a new entity set up as a Ford affiliate that hoped to buy Magic Ford while an investment group ran the dealerships and eventually bought Ford out.
"We speculate that Grapevine has some affiliation with Bert Boeckmann," Shulman said, referring to the owner of Galpin Ford in Van Nuys, the No. 1 seller of Ford and Lincoln-Mercury vehicles in the country.
"He was there [at Magic Ford] last week looking at the dealership," Shulman said.
There was no immediate comment from Boeckmann, who has been widely speculated to be an interested bidder. James Myers, president of Grapevine Motors, said no final investor group had been settled upon.
The bidding for the dealerships did not have quite the excitement of a Christie's auction of a Van Gogh or Matisse, but it was a much-anticipated event both locally and in auto industry circles nationwide.
The 50-plus spectators, many standing, were quiet as bankruptcy trustee R. Todd Neilson began the auction with Republic's previous bid of $13.11 million plus $5 million for assorted other assets.
The sides bid back and forth up to Republic's bid of $15.86 million. Then Myers paused and said, "Grapevine passes," and the audience oohed.
The bidding lasted three minutes. Later, Neilson said he was a bit disappointed that the bidding ended so quickly. "Republic would have paid more," he said, if Grapevine had kept the bidding going.
The pending sale does not include five acres of land underlying the dealership and the immediate surrounding area that is still owned by Gray. Ford said it is owed $14 million on loans it made against the land. Republic said it would consider exercising a previous option to buy the land at $18.5 million.