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Honda, Republic Reach Accord on Dealerships

June 11, 1998| From Bloomberg News

Honda Motor Co. said Wednesday it had reached a legal settlement that will let auto retailer Republic Industries Inc. buy Honda and Acura dealerships.

The agreement ends Honda's lawsuits against Republic over the sale of 12 dealerships in six states, including California. Honda, whose U.S. operations are based in Torrance, had argued that the sale would violate its policy limiting the number of lots an individual or outside company can own.

Republic, which has rapidly created the world's largest chain of auto and truck dealers through acquisitions, will buy the dealerships involved in the suit for an undisclosed price. The Fort Lauderdale, Fla.-based company has bought or agreed to buy 297 dealerships in the last 18 months and has settlements to make more purchases with all the major auto makers except Nissan Motor Co.

"A lot of people have been pessimistic about Republic's ability to implement its business plan because of these lawsuits," said Chatfield Dean & Co. analyst Cheryl Bostater. "This agreement shows they are successfully clearing the path."

Honda, with more than 1,000 Honda and 270 Acura dealerships, is the second-largest foreign auto maker in terms of U.S. sales after Toyota Motor Corp. Honda had sales of 398,877 vehicles through May and a 6.2% share of the market.

Neither company would discuss terms of the settlement. Honda will still limit the number of dealerships an outside company or individual can own, said Honda spokeswoman Barbara Ponce.

Honda filed suit against Republic in May 1997, after Republic said it intended to purchase about 60 Honda and Acura dealerships representing about 20% of Honda's U.S. sales volume, Ponce said.

In September, Republic settled a similar lawsuit with Toyota.

Republic reported 1997 revenue of $10.31 billion, with $6.12 billion coming from its auto-retailing segment.

In New York Stock Exchange trading, Republic shares rose 31 cents to close at $25.31, and Honda's American depositary receipts fell 63 cents to close at $67.38.

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