Carvana Co. (CVNA) declined in the after-market after announcing to acquire ADESA for $2.2 billion in cash. CVNA values at $120, losing more than 4% compared to yesterday’s closing price. The stock closed at $126.05 at the end of the last trading session. The stock volume traded in the last trading session was around 3.6 million shares. The current market cap of the company is around $21.78 billion.
CVNA acquired ADESA
Carvana Co. (CVNA) has agreed to buy ADESA’s US physical auction business for $2.2 billion in cash. ADESA US has 56 facilities and roughly 4,500 corporate and operational employees. In 2021, ADESA’s US company processed over a million transactions on these 4,000-acre properties with 6.5 million square feet of structures.
The combined company would provide considerable infrastructure and team to extend and improve Carvana’s customer offering with a broader variety of automobiles and quicker delivery times.
The two companies, Carvana and ADESA US, significantly relate and complement each other. ADESA US’s reconditioning plants can add about 2M units per year to Carvana’s yearly output. With ADESA US and current Carvana inspection and reconditioning centers within 100 miles of most Americans, buyers will have exposure to more automobiles.
Carvana has secured committed debt financing of up to $3.275 billion from JPMorgan Chase Bank NA and Citigroup Inc. They will also get $1 billion through debt financing for further improvements across the 56 sites. Carvana’s financial advisors are Citi and J.P Morgan. Its legal advisors are Kirkland & Ellis LLP.
CVNA CEO’ Remarks
Founder and CEO Ernie Garcia said that the company is happy that ADESA USA has joined Carvana. A nationwide infrastructure network and a wealthy business will help Carvana become the largest and most successful vehicle reseller. We will be able to give our retail customers more selection, value, and delivery times, while simultaneously raising the bar for our wholesale clients.
Conclusion
The company had announced 125% in the 3rd quarter of 2021. The company has yet to announce its fourth quarter and fiscal 2021 results. The acquisition in cash shows the company has a strong balance sheet and is moving forward to grow the company.
