Hallett Projects Continued Acquisition Strategy

By Richard Greene, AR NewsMagazine Editor
February 11, 2008

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SAN FRANCISCO — Falling on the heels of announcing late last week that ADESA has acquired the Pennsylvania Auto Dealers Exchange, president and chief executive officer Jim Hallett said the auction company is working aggressively on expanding, relocating, upgrading and converting its own sites, as well as acquiring additional facilities, and projected that ADESA should wrap up five more acquisitions by year's end.

Hallett made the far-reaching prediction during a Sunday press conference at the National Automobile Dealers Association Convention and Exposition in San Francisco. He said these improvements and expansion opportunities will not only enable ADESA to gain additional market share but they will also solidify its competitive position within the auction industry.

Since ADESA went private last April and Hallett returned as its top corporate executive, the company has acquired auctions in Syracuse, N.Y.; North Fargo, N.D.; Sioux Falls, S.D.; Quebec City, Canada; and now York, Pa.

According to the company, ADESA now has 59 auction locations in the U.S., Canada and Mexico.

Hallett said that Warren Byrd, executive vice president of corporate development, has been extremely busy of late in negotiating these deals throughout the U.S. and Canada. Byrd is on the road and working the phones to iron out additional acquisitions in strategic markets.

"I would say we will have more announcements within the next 60 to 90 days," Hallett noted.

"If we have five acquisitions now, I would hope that we will have 10 by the end of the year," he added.

"We are growing our business and if an acquisition makes sense, we are going to get it done," Hallett continued.

But ADESA is not focusing just on acquisition expansion. Hallett said it also is relocating operations in Kansas City, Dallas and Phoenix to brand-new, modern, technologically advanced facilities in those same metropolitan markets.

Kansas City is first up. ADESA announced Sunday that it is breaking ground on a 150-plus acre site in Belton, Mo., that will be the new home of ADESA Kansas City. It's within minutes of the current location in nearby Lee's Summit, Mo., Hallett said.

"The yellow metal is on the ground, and we're starting to dig," Hallett said.

In a prepared statement, ADESA Kansas City general manager Harold Chapman explained, "Kansas City is a strong market with an incredible capacity for continued growth. This new facility will enable us to not only support this growth, but to also offer enhanced products and services to our dealers."

The new auction site, which will feature 208,000 square feet of buildings, is expected to open in late 2008, Hallett said at the NADA press briefing.

Also expected to be up and running in a new location by year's end is ADESA Dallas.

"We are under a letter of intent in Dallas on a site in excess of 200 acres, and we expect soon to bring that letter of intent to closure and get it under contract," Hallett said.

"We are going to do our very best to try and have Dallas built by the end of the year," he added.

Phoenix will take a little bit longer, Hallett said. ADESA will be relocating its operation there to a new 215-acre site.

"Our hope is to get ADESA Phoenix completed by the end of the first quarter in 2009," the CEO said.

In addition to acquisitions and relocations, Hallett said that ADESA has devised a strategy to partner with its sister company, Insurance Auto Auctions, to combine salvage and whole-car operations to meet the needs on both sides of the industry.

With ADESA Charlotte operating at full capacity and in need of additional lanes, Hallett said it made good business sense to expand into the Raleigh, N.C., market three hours away.

To pull that move off, Hallett explained that ADESA will team with IAA to use its salvage auction site there and open up a whole-car operation at the same location.

The combined effort is expected to open in the next several months, possibly as early as mid-spring.

"When I bought that salvage auction about five to six years ago, it had a lot of property with it and also a building, and it's a very good salvage facility," Hallett explained. "So, we took the building, converted it and we'll run a three-lane, whole-car facility there as well.

"What we're able to accomplish in Raleigh really demonstrates some of the unique synergies that we have between ADESA and IAA," Hallett observed. "We will focus on finding more of these combination sites."

Taking into account all of these major brick-and-mortar moves, combined with bolstering its e-commerce business, Hallett said ADESA is well-positioned to make solid market-share strides in the coming year and beyond.

"On the whole-car side, we just reached 2 million, and I think over the next three to five years, we'll be able to get to 3 million," Hallett pointed out.

"My vision at the time of returning to ADESA last April was to go after 20 percent of the overall market. My vision now is to get us to 30 percent of the market within a three-to-five-year time span," he indicated.

"Our gains have been phenomenal, and we're now on a momentum swing," Hallett concluded. "The fun is back at ADESA."

Auction/Wholesale