Insurance Auto Auctions is expected to officially be an independent, publicly traded company on June 28.
Current parent company KAR Auction Services said Wednesday that its board of directors formally approved the separation of IAA from KAR, which will be done through a distribution of all outstanding shares of IAA Spinco Inc. (to be renamed IAA Inc.) to KAR stockholders on a pro rata basis.
That distribution is planned for 12:01 am (EDT) on June 28 and will be made to those who are KAR stockholders as of 5 p.m. (EDT) on June 18.
Those KAR stockholders will receive one share of IAA common stock for each KAR common stock share they have as of that June 18 record date for the distriubtion.
Once the distribution is complete, IAA will begin trading on the New York Stock Exchange under the “IAA” ticker, and KAR will have no ownership in the salvage auction company.
“It is with great pleasure that we announce this important step toward completing the separation of IAA from KAR Auction Services and launch the future of two companies,” KAR chairman and chief executive officer Jim Hallett said in a news release.
“Following the separation, KAR will concentrate its focus on its whole car auction marketplaces and technology solutions serving OEMs, captive financing companies, vehicle lending institutions, fleets, and franchise and independent car dealers,” he said.
IAA CEO John Kett said: “I am very proud of our team as we reach this important milestone, which brings us one step closer to a successful launch of IAA as a standalone public company.
“As part of KAR, we have been a leading provider of auction solutions for total loss, damaged and low-value vehicles, and we look forward to building upon that legacy,” Kett said.
More information on terms, conditions, etc. can be found in the KAR news release.
The spin-off was first announced in late February 2018.
The day after that 2018 announcement, Hallett and KAR chief financial officer Eric Loughmiller held an investor conference call to explain more details about the separation.
Both KAR and IAA had “grown to levels that will allow them to succeed independently,” Hallett said when looking at the rationale behind the move.
“Both have sufficient size and resources,” he said. “We believe that each entity will be able to have an independent capital allocation priority, and the respective businesses will operate in independent markets, with minimum overlap.
“The separation will simplify what investors have told us is a very complex business model, and investors can now choose to invest in both companies or focus on one or the other,” Hallett said.