Ritchie Bros. Auctioneers has agreed to purchase IAA for $7.3 billion in stock and cash, the companies announced Monday.
The price includes the assumption of $1.0 billion of net debt. The deal is expected to close in the first half of 2023.
Ritchie Bros. is a global asset management and disposition company, providing avenues for buying and selling used heavy equipment, trucks and other assets.
“IAA accelerates our journey to become the trusted global marketplace for insights, services, and transaction solutions,” Ritchie Bros. CEO Ann Fandozzi said in a news release.
“Their highly complementary business in an adjacent vertical will allow us to unlock additional growth,” Fandozzi said. “Through our trusted brands, similar operating model, and complementary services, we expect to drive efficiencies and create a more resilient business.”
Fandozzi added: “This announcement is a testament to the passion and dedication of the Ritchie Bros. and IAA teams. We expect this transaction to create new and exciting growth and development opportunities for employees of both Ritchie Bros. and IAA as we scale our combined business.
“As we do so, we will continue to foster our aligned culture and shared values grounded in supporting and empowering our team to create a best-in-class customer experience.”
Fandozzi will remain CEO of the combined company, and IAA CEO John Kett and three other IAA board members will be added to the Ritchie Bros. board of directors.
Richie Bros. will remain legally incorporated in Canada and keep its offices/employee base in Burnaby, B.C. The IAA headquarters in the Chicago area will be the combined company’s official headquarters.
When the transaction closes, roughly two-thirds of the combined company’s workforce will be in the U.S.
Ritchie Bros. stockholders will own roughly 59% of the combined company, with IAA stockholders owning the remaining 41%.
“Together, IAA and Ritchie Bros. will have expanded global operations, accelerating international buyer development and enhancing ancillary services such as transportation and finance,” Kett said in a news release.
“The transaction will also provide compelling value to stockholders through the immediate cash component and the opportunity to participate in the substantial growth potential of our combined company with significant resources,” he said. “I believe that very appealing new opportunities are ahead for IAA employees and new capabilities for customers as we enter this exciting new chapter with Ritchie Bros.”
The move comes a little more than three years after former IAA owner KAR Global completed its spin-off of the company, a move initially announced in early 2018.
Dealers Auto Auction Group has acquired Atlas Auto Auction, a move that adds the Little Rock, Ark., market to the auction group’s footprint.
With the purchase of Atlas, DAAG now has 10 auctions throughout the Southeast.
“We are very excited about the acquisition of the Atlas Auto Auction and entering the Little Rock market,” DAAG CEO David Andrews said in a news release. “As a premier auction service provider, DAAG listens to our customers and continues to expand DAAG’s ability to provide services and facilities to additional key markets across the United States.”
He added: “DAAG continues to leverage traditional auction venues with new technology to create strong participation and interaction between our in-lane and online buyers and sellers.”
Matt Lovelis is the owner of Atlas Auto Auction, which will be renamed DAA Little Rock.
“Our dedication to God, the tools He supplies along with hard work, loyalty, and commitment of the wonderful employees of Atlas Auto Auction have made our success all possible. We want to thank our wonderful dealers; we are fortunate for our strong relationships,” Lovelis said in the release.
“It has been our pleasure serving our dealers over the last several years. We are proud to announce that we will continue to serve our dealers in the same manner they are accustomed to under the Dealers Auto Auction brand,” he said. “We are greatly excited about the growth and future of what’s to come here at DAA Little Rock.”
Longtime auction industry executive Warren Byrd of Keyscore Consulting helped put the deal in motion.
“This is the second acquisition this year for Dealers Auto Auction Group,” Byrd said in a news release. “Having played a key role in both of these acquisitions, I am very proud to be a part of their continued growth.”
DAAG acquired VIP Auto Auction in the Atlanta area in September. That auction has been renamed Dealers Auto Auction of Atlanta,
The group's locations also include Dealers Auto Auction of Jackson, Dealers Auto Auction of Memphis, Dealers Auto Auction of Murfreesboro, Dealers Auto Auction of Chattanooga, Dealers Auto Auction of Huntsville, Dealers Auto Auction of Mobile, Dealers Auto Auction of Columbia SC and Dealers Auto Auction East Tennessee.
Hyundai Glovis, the logistics arm of Korean conglomerate Hyundai Group, has acquired a family-owned automotive auction in Pennsylvania.
It is the first acquisition in a national wholesale to retail business Hyundai Glovis plans to build in the United States.
“In Korea, Glovis is the largest auction house. The US is the largest used-car market in the world. Hyundai wanted to be able to tap into it,” Kurtis Johnson, national manager of the used-car business at Glovis America, Inc., tells Auto Remarketing.
Hyundai Glovis includes …
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E Automotive Inc. and its EBlock dealer-to-dealer digital auction subsidiary have purchased another independent auto auction and continue to grow in the Southern U.S.
As part of its U.S. expansion strategy, the Toronto-based company announced Wednesday it has acquired Louisiana’s 1st Choice Auto Auction.
“The acquisition of Louisiana's 1st Choice is another example of us executing our land-meets-technology strategy. This acquisition supports the launch of the EBlock platform in the U.S. Southeast market which we announced earlier this year,” E INC. president and chief executive officer Jason McClenahan said in a news release.
“The addition of physical auctions to our digital dealer-to-dealer platform is a natural extension of our commitment to supporting the evolving needs of our dealer partners,” McClenahan said. “By connecting physical auctions and digital auctions, we are creating a network of logistics hubs that will improve our ability to serve our customers and give them the flexibility to do business where and how they prefer it.”
EBlock announced in February it had expanded to the Southeast, making its plaform available to dealers in Alabama, Florida, Georgia, Kentucky, North Carolina, South Carolina, Tennessee, Virginia and West Virginia. The same month, the company announced it had acquired FastLane Auto Exchange, an independent auction in Michigan.
As for the latest acquistion, McClenahan said: “Louisiana's 1st Choice is a dealer-focused business with an experienced, forward-thinking team that is excited about the digital evolution in the automotive wholesale industry. LAFCAA's Gulf Coast location enables EBlock to expand its digital dealer-to-dealer marketplace in the southern United States.”
The 34-acre auction, which is located 60 miles north of New Orleans in Hammond, La., was founded in 2002.
EBlock plans on integrating the auction’s facilities, team and customer base into its own U.S. marketplace.
John Poteet is LAFCAA’s managing partner.
“EBlock and Louisiana’s 1st Choice share a focus on delivering excellence – whether that is for the customers we serve, the people we employ, or the solutions we invest in,” John Poteet said in a news release. “We’ve always seen EBlock as a leader in empowering physical auctions to embrace digital efficiencies to meet our customers where they are and how they want to do business. We are excited to join the EBlock team and continue to build on the momentum.”
KAR Global’s sale of its U.S. ADESA auction business to Carvana is likely to close within a week, KAR leaders said in an earnings call Wednesday, and with that will be a paradigm shift for the wholesale car business.
The company, the longtime parent of the nation’s second-largest auction chain, will not have a physical auction presence, at least not in the United States (The ADESA Canada, ADESA UK and ADESA Europe businesses, along with KAR's affiliated inspections, transportation and other services brands like AFC, will remain part of KAR.)
Citing rumblings of some dealers looking at alternatives to physical auctions and talk of …
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KAR Global’s agreement to sell its U.S. ADESA auto auction business to Carvana has potential impacts to parties beyond those involved in the deal.
For example, their respective competitors, who have various business relationships with the aforementioned companies.
So, what happens to those relationships moving forward?
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It may seem like digitization of wholesale automotive is at peak intensity.
But it’s only the beginning, says KAR Global chief executive officer Peter Kelly.
And KAR’s agreement to sell its ADESA brick-and-mortar auction business in the U.S. to Carvana makes the company leaner and more financially flexible to capitalize on this increasingly digital environment.
That was part of the rationale Kelly and chief financial officer Eric Loughmiller outlined Friday in an investors call and accompanying presentation slides.
With the sale of its U.S. physical auctions, KAR divests a higher fixed costs business, the company said. It also allows KAR to repay existing debt, making the company more financially flexible to invest in growth opportunities.
The sale of the physical auctions accelerates KAR toward an operating model that’s more asset-light with lower overhead costs, it explained.
Additionally, Carvana becomes a new customer for KAR’s digital platform, as KAR would be a technology partner to Carvana, supporting the ADESA.com digital markeplace as well as the Simulcast and Simulast+ technology behind in-lane virtual sales run by ADESA and independent physical auctions.
The agreement between Carvana and KAR has the latter providing technology services for seven years, and potentially longer
(“It's our expectation that if we deliver the services, it would go well beyond that, like it does with many of our private label clients and our technology clients,” Loughmiller said.)
Lastly, KAR said in its presentation slides that this move “solidifies KAR’s position as a digital marketplace leader with a large and high-growth market opportunity.”
Kelly and team have long emphasized the increasingly digital nature of wholesaling vehicles, and evidence of this pattern is certainly seen by its customers’ behavior.
Especially, among its commercial customers, where consignment has “migrated towards digital channels,” Kelly said. For example, some commercial customers of KAR sold 90% of their volumes last year through its OPENLANE upstream platform.
“We’re seeing a similar trend now occurring perhaps even more rapidly on the dealer consignment side of the business,” Kelly said. “Digital platforms like BacklotCars, TradeRev and CARWAVE (are) growing strongly, double-digit growth per annum, and shifting more volume and more market share towards those digital platforms.
“COVID has certainly accelerated those trends. But fundamentally, we still believe we're in the early stages of our industry's digital transformation.”
KAR believes it has a large and growing opportunity in this space, and will enter the coming years with a simplified, more asset-light, lower-cost business designed to capitalize on digitization.
“Our digital marketplaces provide low-cost, highly efficient venues for our sellers and our buyers to transact. And as we've said before many times, we believe that the digital model increases the total addressable market for our services,” Kelly said.
“Our leading digital brands, our platforms and technology will fuel our growth as this digital penetration continues to increase,” he said. “And that's going to be the focus of our company, our investments, our products, our operations and our people. And that's what we believe will generate the greatest benefits for our customers and ultimately deliver the greatest shareholder value to our investors.”
There are also some mutual benefits from the transaction.
The sale of the ADESA locations may also create potentially a better-use case for the auctions themselves. The move further digitizes KAR and cuts costs, but also provides Carvana with additional physical infrastructure needed to support its digital business.
Loughmiller said KAR “got a real strategic value for the business, but we also feel that the buyer had a significant strategic value to owning this property and having a higher use for relative to their business compared to what we're doing … we have said the use of our properties would evolve over time as we became more digital, and this accelerates the evolution of those properties focusing on reconditioning, focusing on logistics, but also maintaining an auction business as well.”
It's a “win-win” scenario for both companies, Kelly said.
“Fundamentally, Carvana has just acquired a nationwide network of facilities and capabilities that enables them to expand their geographic footprint in just about every major market in the United States,” Kelly said.
“And they're also getting a truly remarkable team with the ADESA team, a team that's passionate about customers, passionate about service, and just a great, great team … It's sort of a higher- and better-use type calculation that is part of this transaction. And I think it's consistent with the strategies of both companies, ours towards a more digital future. And obviously, Carvana they talked about (it) in terms of scaling their business well into the future.”
Perspectives from Carvana on the proposed transaction can be found here.
XLerate Group said Wednesday it has entered a definitive agreement to buy America’s Auto Auction; a deal that will create a supergroup of more than three dozen auto auctions.
The companies did not disclose terms of the deal.
The purchase is arguably one of the most significant in the recent history of the auto auction business.
Granted, there certainly have been other auction group consolidations in the last handful of years. But not at this scale.
America’s Auto Auction purchased Auction Broadcasting Company in 2017; a move that increased its footprint to 19 locations at the time.
And ADESA purchased the eight Brasher’s auctions the previous year.
But this move would consolidate the two largest groups of independent auctions into an entity nearly 40 locations strong.
ADESA (with 70 auction locations, including the U.S. and Canada) and Manheim (111 physical/digital/mobile sites in the U.S.) are the only groups with more auction sites.
The combined company will include 39 auction locations in 19 states, digital and mobile auction businesses and related financing operations.
XLerate has fixed-site and mobile sales in California, Florida, Georgia, Illinois, Indiana, Louisiana, Michigan, New Mexico, Pennsylvania, South Carolina, Texas and Wisconsin.
Bringing America's into the fold adds Alabama, Kentucky, Massachusetts, Missouri, Ohio, Oklahoma and Virginia to the mix, along with additional locations in most of the states where XLerate operates.
So while there is a small footprint overlap and the two groups have historically competed, the acqusition is largely a geographically complementary one, as XLerate chief executive officer Cam Hitchcock explained via phone Wednesday.
Hitchcock and XLerate’s current executive team will operate the company, including executive vice president and chief revenue officer Chuck Tapp and EVP/chief financial officer Charles Kunkel.
“The independent vehicle auction sector is poised for significant growth, as consumer demand expands, and technology continues to enhance the remarketing process,” Hitchcock said in a news release. “We are thrilled to welcome our talented colleagues at AAA, and appreciate the trust placed in us by Brightstar.
“Together, we will develop a platform built on lasting relationships and superior service that leverages the best of digital and physical offerings, and further redefines the remarketing industry,” he said.
America’s Auto Auction president and CEO Ben Lange added: “Since founding AAA in 2000, we have expanded to 23 locations across 15 states and developed a comprehensive and trusted auction process, from vehicle reconditioning, through physical or online auction bidding, financing and check-out.
“I look forward to the combined company building on this solid foundation and benefiting our employees, suppliers and customers.”
XLerate, which is headquartered in Carmel, Ind., is owned by affiliates of Brightstar Capital Partners.
Brightstar will be the controlling shareholder of the combined entity.
“We are excited to build one of the leading platforms in the auction marketplace,” Brightstar partner Gary Hokkanen said in a news release. “The exceptional talent and expertise of the XLerate and AAA teams, enhanced reach of the combined auction site networks, and Brightstar’s access to financial and operational resources, will ensure that this company continues its growth trajectory as a vital part of the vehicle sales ecosystem.”
Brightstar founder and CEO Andrew Weinberg added: “Our investment in AAA, following our earlier acquisition of XLerate, clearly indicates our confidence in the vehicle auction market and its value-creation potential for Brightstar investors.
“With an expansive network, unparalleled team, and expanded resources, Cam and his team are well-positioned to capitalize on the exciting prospects for this sector of the economy.”
Brightstar completed its acquisition of XLerate in late September, after announcing the purchase earlier in the month. It is now the majority owner of the auto auction and remarketing facilitation company.
As part of that deal earlier this year, former owner Huron Capital and XLerate’s senior management team were to retain minority equity stakes.
Trinity Hunt Partners has held a majority stake in America’s Auto Auction since April 2015. America’s Auto Auction is headquartered in Dallas.
Lange, America's CEO, and America's CFO Dustin Miller will not remain with the new company, Hitchcock said via phone.
The XLerate Group has made its third acquisition in just over two months.
The company said Friday it has purchased Clark County Auto Auction.
The Jeffersonville, Ind., auction becomes the 15th auction brand in the XLerate family and the first in the group’s home state of Indiana.
XLerate, which is headquartered in the Indianapolis suburb of Carmel, now has fixed-stie and mobile sales in California, Florida, Georgia, Illinois, Indiana, Louisiana, Michigan, New Mexico, Pennsylvania, South Carolina, Texas, and Wisconsin.
The group’s new addition is helmed by the third generation of the Fetter family.
“The Fetter family has built an outstanding sale and legacy over the last four decades, capped off by the construction of a state-of-the-art auction campus in 2018,” XLerate chief executive officer Cam Hitchcock said in a news release.
“Paul Fetter will continue the family legacy and will run CCAA in his capacity as general manager,” Hitchcock said. “CCAA has a very significant market presence in Indiana, Ohio, Kentucky, and Illinois. We look forward to helping Paul and his team continue to grow volumes at CCAA.”
Principal owner Matt Fetter added: “For 40 years, our business has had the pleasure of serving auto dealers in our region. Joining XLerate group and utilizing their many resources will put CCAA in the best position to continue to serve and grow long term. Their commitment to the industry and focus on customer service very much aligns with our own views, which makes Xlerate a great fit for CCAA.”
The acquisition of CCAA continues a busy summer on both sides of the buy-sell front for XLerate.
A week after announcing new majority ownership and less than two months after buying Liquid Motors, the company has expanded its reach into Louisiana last week, as XLerate announced Sept. 9 it had purchased Greater Shreveport-Bossier Auto Auction.
“We are pleased to officially welcome Matt, Paul and CCAA into the XLerate family,” XLerate executive vice president Chuck Tapp said. “Paul is a proven operator with 35-plus years at CCAA and a laser focus on customer service. He has an intimate knowledge of CCAA’s regional customer base and their expectations.”
XLerate Group will have a new majority owner.
Private equity firm Brightstar Capital Partners announced Thursday it has entered a definitive agreement to acquire a majority stake in the auto auction and remarketing facilitation company.
Current owner Huron Capital and XLerate’s senior management team will retain minority equity stakes.
Terms of the transaction were not disclosed.
“We’re excited to partner with CEO Cam Hitchcock and Xlerate’s experienced and talented team to fuel the Company’s growth in this fragmented industry,” Brightstar founder and chief executive officer Andrew Weinberg said in a news release. “Combining management’s unparalleled knowledge of the auto industry with our resources and network of relationships, we aim to add value for XLerate’s customers and employees as well as our investors.”
Hitchcock, the XLerate CEO, added: “We are thrilled to join forces with Brightstar to scale XLerate even further. Their team’s relationship-driven approach is perfectly suited for the auction industry, and Brightstar’s prior experience in a related vertical and operational acumen will facilitate new opportunities for us.”
Huron Capital purchased what was then known as the American Auto Auction Group in 2014. The auction company rebranded as XLerate later that year.
“We are proud to have played a part in XLerate’s success to this point,” said Peter Mogk, senior partner at Huron Capital, in the release. “Huron Capital looks forward to partnering with Brightstar and XLerate’s management team as Xlerate enters into the next phase of its growth as an innovative leader in the industry.”
