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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowCarmel-based wholesale auto auction firm KAR Global announced Monday that it will acquire Carwave Holdings LLC, a dealer-to-dealer auto auction company in California, in a deal valued at $450 million.
KAR said the move, expected to close by the end of the year, will expand KAR’s footprint in what it calls the “highly fragmented” wholesale used car market and accelerate its efforts to become the go-to digital marketplace for wholesale auto auctions.
Escondido, California-based Carwave, founded in 2009, serves franchised and independent dealers in California and has been expanding into other states.
“This acquisition will advance our clear growth strategy in the dealer-to-dealer segment and accelerate the positive momentum we’ve sustained over the past several quarters,” KAR CEO Peter Kelly said in a statement. “Carwave has a strong, active dealer network in California—the country’s largest wholesale automotive market—as well as a growing presence in Arizona and Texas.
“The acquisition will enhance our continued growth in all of these areas while providing each company’s unique customers with greater choice through an expanded buyer and seller base,” he said.
After the transaction closes, key Carwave leadership—including co-founders John Lauer and Bill Lauer—will remain with the company, officials said. And KAR intends to continue operating Carwave’s headquarters in Escondido.
“We started Carwave to provide dealers with a low-cost, low-stress and hassle-free alternative to physical wholesale auctions,” Lauer, Carwave’s president, said in a statement. “KAR has truly embraced these core principles, and their progressive approach continues to lead the digital transformation of our industry.”
KAR shares were down 15 cents—or less than 1%—to $16.80 in pre-market trading.
Earlier this month, KAR announced it had second-quarter earnings of $585.4 million, an increase of 40% compared with the same period in 2020, which was impacted by the pandemic. But the company’s quarter earnings of $0.15 per share missed the Zacks consensus estimate of $0.16 per share.
The company has been in acquisition mode. In May, KAR acquired the company that makes a cloud-based software called Velocicast that is the backbone of the Carmel-based company’s live, online auto auctions.
And in September 2020, it announced a $425 million acquisition of BacklotCars Inc., a rapidly growing Kansas City, Missouri-based firm that uses artificial intelligence and machine learning to provide dealers with personalized recommendations for purchases.
Also, this spring, KAR announced it was the major investor in a $15 million funding round for Israel-based company—Ravin AI—that makes artificial intelligence products that aid in vehicle inspections.
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