RumbleOn, which has initially focused on motorcycles and other powersports vehicles, has had its eye on “adjacent markets.”

Friday, it expanded into one of those: the automobile market.

The company — which provides an ecommerce platform for dealers and consumers to buy, sell, trade and finance pre-owned vehicles — announced definitive agreements to purchase Wholesale, Inc. and Wholesale Express, LLC.

Total consideration for the deal is $23 million. That includes $16 million cash and the remaining balance of Class B shares of RumbleOn.  The total amount, RumbleOn said, is “subject to adjustment based on the stock price of the RumbleOn Class B Common Stock at closing.”

It was a busy day for RumbleOn. The company also priced an estimated $21.5 million private placement of Class B shares and added $5 million to its existing credit facility. Additionally, the company shared preliminary results for the third quarter.

The company anticipates gross proceeds from the B Common Stock offering, priced at $7.10 a share, to be $21.5 million, and plans to use those for the aforementioned purchases of the two companies and working capital.  It is fully subscribed and is likely to close Monday, if customary closing conditions are met.

More details on transaction

As for the companies being acquired, Wholesale Inc. is an independent distributor of used vehicles, buying and selling about 2,000 each month to dealers and consumers. Wholesale Express, LLC, is its related logistics company.

 “Our plan has always been to expand into adjacent markets and the acquisition of Wholesale provides rapid and profitable entrance into the 44 million annual sales automobile market. We will enter this new market with meaningful size and scale, and without the significant start-up costs typically associated with new market entries,” RumbleOn founder, chairman and chief executive Marshall Chesrown said in a news release.

“RumbleOn and Wholesale have strong synergies across our business models and solutions. The combination of the current visitors already familiar with our powersports programs and Wholesale’s prominent brand and reputation creates an incredible opportunity,” Chesrown said.

The deal to buy the companies should close Monday, if customary closing conditions are met, including the aforementioned private placement.

Moving forward

The entire Wholesale management team and staff are set to become part of the RumbleOn team. The Wholesale entities will operate under the Wholesale brand, co-branded with RumbleOn.

“We look forward to welcoming the Wholesale employees to the RumbleOn team and leveraging the company’s powerful brand and prominent market position as we execute on our mission to transform the way any pre-owned vehicle with a VIN number can be bought and sold. Our business combination will be a powerful force to deliver value to our customers, partners and shareholders,” Chesrown said.

Added Wholesale Inc. owner Steve Brewster: “It’s clear that consumers are more comfortable buying and selling vehicles sight-unseen than ever before. RumbleOn’s rapid growth over the past year demonstrates the strength of the technology platform, the efficiency of the business model and the consumer appeal of its offering.

“We are excited to join RumbleOn and integrate their technology and online presence as we endeavor to expand the Wholesale Inc. brand across America.”