Matt McKay, who over nearly four decades went from teenage car salesman to owner of Louisiana's largest auto dealership empire, has agreed to sell his All Star Automotive Group for a reported $700 million in what industry experts said is a record transaction for the state.
McKay's auto network includes 14 brands in 13 locations in Baton Rouge, Denham Springs and Prairieville, as well as a collision center, a parts warehouse and a used car "super center." Brands include Toyota, Lincoln, Genesis and Hyundai — those four dealerships are located near to each other along a car dealer's row on Airline Highway, where the huge used car center also can be found.
The terms of sale were not publicly disclosed, but people familiar with the deal said it valued the group at around $700 million. That includes just under $200 million of real estate, all of which is fully owned by All Star, as well as group brand value of around $80 million, with the automobile inventory as well as other tangible assets making up the rest.
All Star's buyer is Charleston, South Carolina-based Hudson Automotive Group. As is typical in the industry, the deal is subject to approval by each of the carmakers who have "right of first refusal" when dealerships are sold, and often exercise that option to bring in another buyer at the same or a higher price.
Chris Donner, All Star's chief financial officer, said McKay had been planning the sale for some time. He said Hudson executives visited the dealerships last week to tell them they wanted continuity and planned to retain the roughly 700 employees in the group, which includes showroom salespeople, administration, mechanics and parts warehouse employees.
"Hudson executives went around from store to store to let employees know about the transaction," he said. "They told them it was a time in Matt's life where he felt that as much as he loves the business it was the right time to consider something like this for the benefit of the employees."
Donner said that only out-of-state buyers were considered in an effort to maintain confidentiality.
David Hudson, CEO of Hudson Automotive Group, is a third-generation dealership owner — his grandfather started the company in Providence, Kentucky, in 1948. With backing from Redwood Holdings, one of the investment companies owned by billionaire Jim Davis, cofounder of the Allegis staffing firm, Hudson has built the auto group into a major regional player, with 55 dealerships in eight states across the South.
Prior to the All Star deal, Hudson owned only one dealership in Louisiana: the Royal Honda on Veterans Memorial Boulevard in Metairie. Once the transaction closes, it will become the biggest car dealer in the state, picking up two Chevrolet dealerships in Baton Rouge; Genesis, Hyundai, Kia, Toyota, Volvo, and Isuzu dealerships in Baton Rouge; a Ford Lincoln lot in Prairieville; and Chrysler Dodge Jeep Ram, Ford and Kia Nissan dealerships in Denham Springs.
"I didn't realize that until they told me after the transaction was done," Hudson said in a phone interview.
Hudson said the company has built good relationships with the carmakers as it has grown rapidly through acquisitions. He said it doesn't expect to lose any of the All Star dealerships through "right of first refusal" and plans to close the transaction in the fourth quarter.
First job
McKay, 70, played American Legion baseball in his teens and got into cars when he went to work for his team's sponsor, Audubon Ford, as a salesman in the 1970s.
About a decade later, he was ready to buy his first dealership and partnered with lawyer John Noland to acquire a Ford showroom in Gonzales.
"My father was recently retired from the law firm Breazeale Sachse and wanted to be in the car business," said John "Jay" Noland Jr., Noland's son. "Through mutual friends, he came to learn that this man Matt McKay was a sharp guy and had all the qualities to be a business partner."
Twenty years later after building the All Star group to about its current size, McKay honored a deal they had in place since the start and bought Noland's stake to make himself sole owner of the All Star group.
"It was a wonderful partnership, and they never had a cross word," said Noland Jr. "They remained close and did other deals together in real estate and other ventures."
McKay and Noland Sr., neither of whom were available for interview, also have been prominent philanthropists in Baton Rouge, with each having served as chair of the Baton Rouge Area Foundation.
Education and training has been a particular focus of McKay's philanthropic endeavors. In 2017, he opened the McKay Automotive Technology Center, a $51 million, public-private workforce training facility at Baton Rouge Community College’s Ardendale Campus.
According to a profile of McKay in the Baton Rouge foundation's magazine at the time, the center was named for McKay’s father, who had been a teacher and coach in the East Baton Rouge school system for most of his career. The 83,000-square-foot center was the first in the region to offer sophisticated training to prepare people to work in high-tech automotive jobs.
In a world that often produces colorful, larger-than-life characters, McKay kept a fairly low profile while he built his car empire.
"He doesn't like to be in the limelight as far as doing the TV commercials and whatnot," Donner said. "In fact, he's never once been in a commercial; he's more of a behind-the-scenes kind of guy, very businesslike and numbers oriented."
McKay's two adult sons, Taylor and Hays, and his wife Sherri were involved in philanthropic efforts, but none showed interest in taking over the car business.
Car dealerships in Louisiana, as elsewhere in the U.S., have been a source of a number of prominent family fortunes, including those built up by the late Tom Benson, Ray Brandt and the Bohn family.
In the past few decades, the trend nationwide has been for family-owned car dealership groups to sell to bigger groups that are consolidating the business rather than to pass them down to the next generation.
This was exemplified by the sale last year of the of Moffitt Automotive, one of the oldest family-owned auto retailers in the Shreveport-Bossier City market, which sold its Porsche, Audi, Mazda and Volkswagen dealerships to a Dallas-based firm, part of a record year for number of dealership sales.
Kerrigan Advisors, which advised Moffitt and McKay on their transactions, forecast that the number of car dealership groups in the U.S. will shrink by about a quarter, to 6,000, as the move toward bigger regional firms continues.
The largest previous auto dealership transaction in Louisiana was the Brandt Group, which sold last year for a reported $280 million, according to Alan Haig of auto advisory group Haig Partners. That deal, which included 13 locations, had a much smaller real estate footprint, as many of the properties weren't owned by the group.
Some Louisiana-based auto groups are as large or bigger than All Star, including Troy Duhon's Premier Auto Group and Matt Bowers network, but they include out-of-state dealerships. All Star has the biggest network in located solely in Louisiana.