Auto retail veteran McLarty leads new SPAC

Auto retailing veteran and entrepreneur Franklin McLarty has launched a blank-check company that aims to merge with or acquire a business focused on any of a variety of possible industries including transportation and automotive.

McLarty is chairman of MDH Acquisition Corp. of Southlake, Texas, which began trading last week under the MDH.U symbol on the New York Stock Exchange. It closed a $276 million initial public offering.

McLarty said there are no plans to use the blank-check company — also known as a special purpose acquisition company, or SPAC — to roll up dealership groups to which he has a link such as RML Automotive, McLarty Automotive or the former Southern United Auto Group, now known as Matt Bowers Auto Group.

McLarty told Automotive News last week that MDH is open to automotive retail as a target sector, but he and his team likely aren’t interested in traditional franchised dealerships.

“I don’t know if there’s an urgent need for another public retailer of the exact same flavor as the existing public companies,” McLarty said.

A company that has a unique model, however, would garner interest, he said.

“Obviously CarLotz, for example, is a very differentiated model, even though at its core is auto retail,” he said.

McLarty company McLarty Diversified Holdings is among the investors that put $125 million into CarLotz Inc., a used-vehicle consignment business. CarLotz went public last month following a merger with Acamar Partners Acquisition Corp., also a SPAC.

Blank-check companies or SPACs generally have two years to complete a deal or they must return investor money. McLarty and his team likely will focus on targets in transportation, logistics, telecommunications, financial services or professional services industries, according to MDH. As far as location, MDH is looking for companies in “the heartland,” which the company defined as “the region bounded by the Rockies to the west, the Eastern Seaboard to the east, the Rust Belt to the north and the Gulf of Mexico to the south.”

MDH’s board includes some familiar faces in auto retail: Mike Maroone and Tim Russi are directors, among others. Maroone, former COO of AutoNation Inc., is CEO of the Maroone USA dealership group with six stores in Colorado and Florida. He also sits on the board of online used-vehicle retailer Carvana. Russi is Ally’s former vice chairman of auto finance.

McLarty’s father, Thomas “Mack” McLarty, is a senior adviser to MDH.

The McLarty family has a long history in auto retail.

Franklin McLarty helped found RML Automotive and was CEO of the dealership group from 2012 to 2015. Mack McLarty is vice chairman, and Robert Johnson, founder of the BET television network, is chairman.

RML of Lewisville, Texas, ranked No. 29 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with retail sales of 26,160 new vehicles in 2019.

Mark McLarty, Franklin McLarty’s brother, is chairman of McLarty Automotive. The Little Rock, Ark., retailer ranks No. 31 on Automotive News‘ list of the top 150 dealerships groups based in the U.S., with retail sales of 24,636 new vehicles in 2019.

Franklin McLarty is co-founder and minority partner in Matt Bowers Auto Group. He also is a board member for publicly traded trucking company P.A.M. Transportation Services Inc.; co-founder and co-chairman of CapRocq, a real estate investment firm; and chairman of the Firmament Group, a debt and equity capital solutions company.

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