KAR Global to Sell ADESA Auction Business for $2.2B
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Carmel-based KAR Global (NYSE: KAR) has entered into an agreement to sell its ADESA U.S. physical auction business to Carvana Co. (NYSE: CVNA) in Arizona. The deal, which includes all auction sales, operations and staff of 56 ADESA U.S. vehicle logistics centers, is valued at $2.2 billion.
As part of the deal, Carvana will also have exclusive use of the ADESA.com marketplace in the U.S.
About 4,500 employees, or about half of KAR’s workforce, will transition to Carvana once the sale is complete. The company did not specify how many of the affected employees are in Indiana.
Additionally, KAR will retain its ADESA business units in Canada, the United Kingdom and Europe.
KAR Global Chief Executive Officer Peter Kelley says off-premise sales represent 50% of KAR Global’s vehicle sales and are seeing upward momentum.
“KAR has always been a leader in the digital transformation of remarketing, and this transaction firmly positions us as the premier digital marketplace provider for wholesale used vehicles,” Kelly said in written remarks. “This transaction will allow us to focus our investments and energy on those higher growth, higher margin digital marketplaces and on delivering the most strategic solutions to our customers. By simplifying our business, we are better positioned to lead and win in the fastest growing segments of this industry.”
Under the terms of the agreement, KAR will become a technology partner to Carvana and support the ADESA.com marketplace, as well as the Simulcast and Simulcast+ technology used for in-lane virtual sales.
KAR will also continue to operate its OPENLANE platform, which supports more than 40 private-label programs that represent about 80% of off-lease inventory sales in North America. The company will maintain operation of its digital dealer-to-dealer businesses, BacklotCars and CARWAVE in the U.S. and TradeRev in Canada.
The sale, which has been approved by the boards of directors for both companies, is expected to close in the second quarter. KAR Global says the proceeds of the sale will be used to reduce company debt.