Carvana to buy KAR Global’s U.S. vehicle auction business for over $2 bln – Reuters
Vehicles are displayed at a Carvana dealership, which allows customers to buy a used car online and have it delivered or pick it up from an automated-tower, in Austin, Texas, U.S., March 9, 2017. Picture taken March 9, 2017. REUTERS/Brian Snyder
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Feb 24 (Reuters) – Online used-car seller Carvana (CVNA.N) has agreed to buy KAR Global’s (KAR.N) vehicle auction business in the United States for $2.2 billion to boost its physical presence and maintain growth as a pandemic-induced boom fades.
The deal for ADESA’s U.S. unit announced on Thursday gives Carvana access to a business that brought in over $800 million in revenue last year and has 56 physical sites.
Carvana posted strong sales early on in the pandemic as a thin supply of new cars drove up prices of used vehicles, but its growth has slowed in the past few quarters.
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It said on Thursday that revenue jumped 105% in the fourth quarter to $3.75 billion, compared with a 125% rise in the previous three months.
“Carvana and ADESA U.S.’s footprints are highly complementary and combining them extends the collective reach of the two businesses,” the used-car seller said.
It added that when fully utilized, ADESA’s reconditioning operations can add about 2 million units to its annual production.
KAR Global’s shares were 76% higher in extended trading, while Carvana fell 4%.
About half of U.S. consumers are preferring used vehicles as the global semiconductor shortage and other supply chain issues make new vehicles more expensive and harder to get, according to industry research firm Supplyframe.
Citi and J.P. Morgan Securities served as Carvana’s financial advisors, while Kirkland & Ellis LLP was its legal advisor.
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Reporting by Akash Sriram in Bengaluru; Editing by Aditya Soni
Our Standards: The Thomson Reuters Trust Principles.
