OpenLane to expand Canadian presence with $95M acquisition
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Carmel-based OpenLane Inc., which operates online platforms for buying and selling wholesale used vehicles, announced Monday afternoon that it plans to acquire Atlanta-based Cox Automotive Inc.’s Manheim Canada business for $95 million.
OpenLane, which operated as KAR Auction Services Inc. until a rebranding earlier this year, told IBJ that it expects to close the deal within the next 30 days.
Both OpenLane and Manheim Canada have physical facilities in five metro areas in Canada: Montreal, Vancouver, Edmonton, Toronto and Halifax.
The acquisition will include Manheim Canada’s Montreal facility, but not the other four. OpenLane plans to move its Montreal people, operations and inventory into Manheim’s Montreal facility, then sell the OpenLane Montreal facility. Proceeds from that sale are expected to offset a “substantial part” of the $95 million acquisition costs, OpenLane CEO Peter Kelly said during a call with investors late Monday.
In the other four locations, OpenLane plans to consolidate Manheim’s business operations into its existing facilities in each city. Manheim, which is exiting the Canadian market, will then sell off its Vancouver, Edmonton, Toronto and Halifax locations.
“The net result of all this is that, in each of those five metro areas, once we have executed this plan we will have replaced two facilities that are less than fully utilized with one, more highly utilized facility,” Kelly said. “This will create greater efficiency and scale, and ultimately those efficiencies will benefit customers.”
Kelly said OpenLane plans to offer employment to “select staff” from Manheim—about 100 employees who work in customer relationship or operational jobs.
The acquisition also includes Manheim Canada’s book of business, vehicle inventory and corresponding data. It does not include any new technology, Kelly said—post-acquisition, transactions will take place on OpenLane’s Canadian digital marketplace, which launched in June.
Shares of OpenLane closed at $14.97 Monday, up 10 cents from Friday’s close. OpenLane made the acquisition announcement after the close of trading Monday. According to Yahoo Finance, no after-hours trading of OpenLane had taken place as of 5:29 p.m. Monday.