Gag order quiets
execs regarding sales
at TheoDaviesEmployees have not been
informed despite reports of
a $100 million deal for
6 car dealerships
The tighter Hong Kong-based Jardine Matheson Ltd. holds on to information about the sale of its six TheoDavies car dealerships in Hawaii, the more information gets squeezed out between its fingers.
Rank-and-file employees of the auto dealerships and related businesses have not been informed of new incoming ownership, despite news reports of the $100 million transaction.
An employee at a TheoDavies dealership, who asked to remain anonymous, said an article reporting the sale was clipped out of the newspaper yesterday to prevent employees and customers from reading it.
Local management officials are declining comment as are spokespeople for Jardine in Hong Kong, saying they will not comment on "speculative reports."
The South Carolina automobile dealer involved in the purchase is now withholding further comment, indicating it may have been premature for him to be quoted in The Post and Courier of Charleston, S.C.
Gene Reed did not dispute any facts in the Oct. 11 story, however.
It said he was brought into the deal by California-based Fletcher Jones Motor Management Group Inc. principal Fletcher Jones Jr. and that some managerial changes were possible but that most employees would be retained.
The state Labor Department has not been notified of the transaction or its impact on TheoDavies' 255 employees. A company that size is required to file a plant closing notice with state or federal labor offices or both in the event of such a sale. That no such notice has been filed could indicate that the transaction is more than 60 days away from completion, but industry insiders in Hawaii and on the mainland contacted by the Star-Bulletin have heard for weeks that the deal is done.
Fletcher "Ted" Jones Jr., with dealerships in California, Nevada and Illinois, has not returned repeated calls; nor has TheoDavies President Gary Wassel, who has been traveling but is due back in the office today.
Fletcher Jones' Web site claims the company sells more Mercedes-Benz vehicles than any other dealership in the United States.
TheoDavies has been Hawaii's exclusive dealer for Mercedes and other high-end makes such as Jaguar, Porsche and Land Rover.
Mercedes-Benz USA would not comment on the current deal but said it does not receive proceeds from such transactions.
"Our involvement is typically that of approving the buy-sell to ensure that the prospective buyer meets the required criteria to successfully operate a Mercedes dealership in a given market," said Donna Boland, manager of corporate communications.
Reed is a Toyota and Lexus franchisee who recently purchased an interest in a Harley-Davidson dealership in Florida.
Automobile dealer Mike McKenna sells vehicle makes from Mazda to VW to Ford and Hummer locally, but also has dealerships in California that sell BMWs, Porsches, Audis and VWs.
He doesn't see his high-end business as being in competition with Fletcher Jones' Mercedes dealership an hour away.
"You don't compete against Mercedes. Well, you do, but we don't," he said.
"In the gist of sales opposition, yeah you do, but my stores don't.
"We're more of a sporty car line. Even the 7-series, where the Mercedes has been kind of clerical ... Moms and Pops like it," he said.
He might sell a man a Porsche and the wife might want a Mercedes, "but if the wife is a younger gal she usually wants the BMW," McKenna said.
BMW of Honolulu President Dennis Short could not be reached.
The $100 million price tag for the dealerships reflects prices involved in mainland transactions, where Hawaii dealerships used to go for much less, McKenna said. A standard formula to determine purchase price is seven-times earnings, but McKenna said he was not privy to the details of the TheoDavies deal.
Big Island Honda's Hilo and Kona stores, also owned by Jardine, are part of the deal.
"It's definitely a big transaction," said Stanley Masamitsu, president of Tony Hawaii Automotive Group Ltd. Honda dealerships have a cooperative "for what's considered regional advertising," Masamitsu said, but no inside intelligence on the deal had come through the Hawaii Honda Dealers Advertising Association, he said.
"In most industries, everybody knows what everyone else is doing," but that has not been widely true in this case, Masamitsu said.
Other Hawaii businesses belonging to Jardine include Theo H. Davies Co. Ltd., which operates Pacific Machinery and the franchises for Pizza Hut and Taco Bell, Long John Silver's and A&W All American Food restaurants. Those also are being shopped to potential buyers.
Theo H. Davies Co. Ltd. was known as a Big Five company that dominated business and politics in Hawaii between the late-1800s and the mid-1900s. The other four companies, all stemming from roots in the sugar industry, were Castle & Cooke, Alexander & Baldwin, C. Brewer & Co. and Amfac.
