SC TO-C

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): March 6, 2006

AutoNation, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware	1-13107	73-1105145
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
110 SE 6th Street, Ft. Lauderdale, Florida		33301
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: (954) 769-6000

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[x]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

In connection with the announcement by AutoNation, Inc. (the "Company") regarding its cash tender offer to purchase up to 50 million shares of its common stock at a price per share of $23 as described below, on March 7, 2006 the Company announced that ESL Investments, Inc. and certain affiliated entities ("ESL"), which own 77,061,800 shares, or 29%, of the Company’s common stock, have agreed to tender all of their shares in such offer, subject to certain conditions. Two of the Company’s directors, Edward S. Lampert and William C. Crowley, are Chief Executive Officer and President and Chief Operating Officer, respectively, of ESL. A copy of the agreement, which was entered into on March 6, 2006, is attached as Exhibit 10.1 hereto and its contents are incorporated herein by reference.

Item 8.01 Other Events.

On March 7, 2006, the Company issued a press release announcing that it intends to commence a cash tender offer to purchase up to 50 million shares of its common stock at a price per share of $23 (the "Offer"). The Company expects to commence the Offer by no later than March 10, 2006. A copy of the press release is attached as Exhibit 99.1 hereto and its contents are incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

10.1 Letter Agreement, dated March 6, 2006, regarding agreement by ESL
Investments, Inc. and certain affiliated entities to tender all of their
shares in the Offer.

99.1 Press Release, dated March 7, 2006, announcing that AutoNation, Inc.
intends to commence a cash tender offer for 50,000,000 shares of its
common stock.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AutoNation, Inc.
March 7, 2006	By:	/s/ Jonathan P. Ferrando
		Name: Jonathan P. Ferrando
		Title: Executive Vice President, General Counsel and Secretary

Exhibit Index

Exhibit No.	Description
10.1	10.1 Letter Agreement, dated March 6, 2006, regarding agreement by ESL Investments, Inc. and certain affiliated entities to tender all of their shares in the Offer.
99.1	99.1 Press Release, dated March 7, 2006, announcing that AutoNation, Inc. intends to commence a cash tender offer for 50,000,000 shares of its common stock.

EX-10.1

Exhibit 10.1

March 6, 2006

Mr. Mike Jackson
Chairman and Chief Executive Officer
AutoNation, Inc.
AutoNation Tower
110 S.E. 6^th Street
Fort Lauderdale, Florida 33301

Re: Proposed Equity Tender Offer

Dear Mike:

I am writing to you in reference to the proposed cash tender offer (the “Equity Tender Offer”) by AutoNation, Inc. (the “Company”) to purchase up to 50,000,000 shares of the Company’s common stock (the “Common Stock”), substantially upon the terms of the draft Offer to Purchase received from the Company and the related draft Letter of Transmittal received from the Company. As described by the Company, the Equity Tender Offer is one part of a recapitalization transaction (the “Transactions”) that includes (i) a concurrent tender offer and consent solicitation by the Company for any and all of its 9% senior notes due 2008, (ii) an amendment or an amendment and restatement of the Company’s $600 million, unsecured, revolving credit facility to, among other things, provide for a new $300 million term loan facility, which can be increased to $400 million at the Company’s option and (iii) an offering of senior unsecured notes with an aggregate principal amount of approximately $900 million.

ESL Investments, Inc., together with its affiliated entities and funds (“ESL”), collectively, beneficially own and have the right to tender into the Equity Tender Offer 77,061,800 shares (the “Shares”) of Common Stock. In connection with the Company’s decision to implement the Transactions, the Company has requested that ESL state its intentions with respect to the Shares and agree to tender the Shares into the Equity Tender Offer. Pursuant to that request by the Company, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, ESL agrees to tender all of the Shares (without a minimum purchase condition) into the Equity Tender Offer pursuant to and in accordance with the terms of the Equity Tender Offer no later than the tenth business day following the commencement of the Equity Tender Offer, and not withdraw (once tendered) any of the Shares from the Equity Tender Offer. Notwithstanding the foregoing, ESL’s obligation to tender (and not withdraw) the Shares is conditioned upon (i) the price to be paid per share of Common Stock in the Equity Tender Offer being not less than $23.00; (ii) the final expiration of the Equity Tender Offer and the acceptance for payment of the Common Stock tendered therein being no later than April 28, 2006; and (iii) no person commencing a bona fide tender or exchange offer for 5% or more of the Common Stock (other than the Company in connection with the Equity Tender Offer), no merger, acquisition, business combination or other similar transaction with or involving the Company being publicly disclosed and the Company not entering into a definitive agreement or an agreement in principle with any person with respect to a merger, business combination or other similar transaction. In making its decision to tender the Shares, ESL understands that neither the Company nor its Board of Directors will be making any recommendation to ESL regarding whether ESL should tender or refrain from tendering its Shares.

ESL hereby consents to the Company’s disclosure of ESL’s agreement to tender (and not withdraw) the Shares in any press releases announcing the Transactions (so long as ESL is provided the opportunity to review and approve such reference in any such release in advance), the various tender offer and other disclosure documents relating to the Transactions (so long as ESL is provided the opportunity to review and approve such reference in any such documents in advance), and in other public disclosures from the Company made in reference to the Transactions.

We look forward to the successful completion of the Transactions, including the Equity Tender Offer.

Very truly yours,

ESL Investments, Inc.

/s/ Theodore W. Ulyot

Name: Theodore W. Ulyot
Title: EVP and General Counsel

Exhibit 99.1

AUTONATION, INC. ANNOUNCES INTENTION TO COMMENCE A
CASH TENDER OFFER TO PURCHASE 50 MILLION SHARES OF ITS
COMMON STOCK AT A PRICE OF $23 PER SHARE

FORT LAUDERDALE, Fla. (March 7, 2006) -— AutoNation, Inc. (NYSE: AN), America’s largest automotive retailer, announced today that it intends to commence a cash tender offer to purchase up to 50 million shares of its common stock at a price per share of $23. The number of shares proposed to be purchased in the offer represents approximately 19% of the Company’s currently outstanding shares. The tender price represents a 10% premium over the closing price of the Company’s common stock on the New York Stock Exchange of $20.89 per share on March 6, 2006, the last trading day prior to the announcement.

Mike Jackson, the Company’s Chairman and Chief Executive Officer, stated, “The tender offer for our common stock demonstrates our confidence in the future of AutoNation. The transaction will allow us to deliver stockholder value while retaining financial flexibility to take advantage of future opportunities. We expect the transaction to be accretive to future earnings in the range of $.08 to $.10 per share on a full year basis.”

AutoNation expects to commence the offer by no later than March 10, 2006. It is presently anticipated that the offer will remain open for a period of at least 20 business days. Tenders of shares must be made on or prior to the expiration of the offer and may be withdrawn at any time on or prior to the expiration of the offer.

The Company expects to pay for the shares purchased in the tender offer through a combination of debt financing and existing cash. The Company also intends to seek to repurchase all of its existing 9% senior notes due 2008 in the aggregate principal amount of $323.5 million through a concurrent cash tender offer and consent solicitation.

The stock tender offer will be subject to certain terms and conditions that will be described in the offer to purchase that will be distributed to stockholders and filed with the Securities and Exchange Commission, including that the Company obtains the debt financing on reasonably satisfactory terms prior to the expiration of the tender offer. Additionally, the Company may exercise its right to purchase up to an additional 2% of its outstanding common stock without extending the offer.

On the terms and subject to the conditions of the offer, the Company’s stockholders will have the opportunity to tender some or all of their shares at a price of $23 per share, net in cash, without interest. Since it is expected that more than 50 million shares will be tendered, AutoNation will purchase the shares tendered on a pro rata basis pursuant to certain procedures specified in the offer to purchase to be mailed to stockholders.

ESL Investments, Inc., which owns 77,061,800 shares, or 29%, of the Company’s common stock, has agreed to tender all of its shares in the offer. Two of the Company’s directors, Edward S. Lampert and William C. Crowley, are Chief Executive Officer and President and Chief Operating Officer, respectively, of ESL Investments, Inc. Assuming that most other stockholders participate in the tender offer, ESL’s percentage ownership interest in the Company would remain substantially unchanged. Mr. Lampert stated, “ESL expects to maintain a substantial ownership interest in AutoNation. This transaction should create a more efficient capital structure for the Company.”

All of the Company’s other directors and executive officers have advised the Company that they do not intend to tender any of their shares in the tender offer, except for Michael E. Maroone, the Company’s President and Chief Operating Officer, who has advised the Company that he intends to tender approximately three million shares of common stock that he owns in the tender offer. Mr. Maroone beneficially owns a total of approximately six million shares, including approximately three million vested stock options.

None of the Company, its Board of Directors, the information agent, the depositary or the dealer managers will make any recommendations to stockholders as to whether to tender or refrain from tendering their shares into the offer. Stockholders must decide how many shares they will tender, if any.

The information agent for the tender offer will be Innisfree M&A Incorporated. The depositary for the Offer will be Computershare Trust Company of New York. The dealer managers for the tender offer will be J.P. Morgan Securities Inc. and Banc of America Securities LLC. The offer to purchase, letter of transmittal and related documents will be mailed to stockholders of record and also will be made available for distribution to beneficial owners of the Company’s common stock. Stockholders with questions or who would like additional copies of the offer documents may call the information agent, Innisfree M&A Incorporated, toll-free at (877) 825-8631. (Banks and brokers may call collect at (212) 750-5833.)

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America’s largest automotive retailer and a component of the Standard and Poor’s 500 Index. AutoNation has approximately 27,000 full-time employees and owns and operates 346 new vehicle franchises in 17 states.

This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell shares of AutoNation, Inc. common stock. The offer will be made only pursuant to the offer to purchase, letter of transmittal and related materials that the company will shortly be distributing to its stockholders and filing with the Securities and Exchange Commission. Stockholders and investors should read carefully the offer to purchase, letter of transmittal and related materials because they contain important information, including the various terms of, and conditions to, the offer. Stockholders and investors may obtain a free copy of the tender offer statement on Schedule TO, the offer to purchase, letter of transmittal and other documents that the Company will shortly be filing with the Securities and Exchange Commission at the Commission’s website at www.sec.gov or by calling Innisfree M&A Incorporated, the information agent for the offer, toll-free at (877) 825-8631. Stockholders are urged to carefully read these materials prior to making any decision with respect to the offer.

Certain statements and information included in this release constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management’s projections, estimates and expectations is contained in the Company’s SEC filings. The Company undertakes no duty to update its forward-looking statements, including its long-term growth targets.