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KAR to Accelerate Dealer-to-Dealer Growth, Profitability Through Acquisition of CARWAVE

– Proposed transaction will complement KAR’s dealer-to-dealer offerings with a leading platform in California — the nation’s largest automotive market

– With the addition of CARWAVE’s scale and financial performance, KAR expects to be immediately profitable across its North American dealer-to-dealer platforms

– Combination will bring highly complementary talent, technology and capabilities to KAR

– Transaction valued at $450 million; tax deductions aggregating approximately $400 million that will result in a reduction in future cash taxes of over $100 million are expected to be available to KAR upon completion of the transaction

KAR Auction Services, Inc., d/b/a/ KAR Global (KAR) has signed a definitive agreement to acquire CARWAVE Holdings LLC (“CARWAVE”) subject to certain regulatory approvals and other customary closing conditions. CARWAVE is an online dealer-to-dealer marketplace featuring certified mechanical inspections, buyer guarantees and a 24/7, direct offer trading format with semi-weekly live auctions. Upon closing, the acquisition will build on KAR’s consistent growth in the dealer-to-dealer segment, enhance KAR’s position in the highly fragmented wholesale used vehicle market, and accelerate the company’s overall transformation to a digital marketplace company.

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“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,” said Peter Kelly, CEO of KAR Global. “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. CARWAVE’s asset-light, technology-forward business model, with approximately 100,000 vehicles sold over the past 12 months, will enable us to continue driving innovation, achieve immediate profitability across our dealer-to-dealer offerings and enhance our position in the highly competitive dealer-to-dealer space.”

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CARWAVE was founded in 2009 in California and currently serves a broad network of franchise and independent dealers across ArizonaCaliforniaNevadaOregon and Texas. The company’s online platform enables dealers to conveniently wholesale trade-ins and aged frontline units directly from their lot and quickly source new inventory from anywhere.

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After the transaction closes, key CARWAVE leadership including co-founders John Lauer and Bill Lauer will remain with the company, and KAR intends to continue operating CARWAVE’s Escondido, California headquarters.

“We started CARWAVE to provide dealers with a low cost, low stress and hassle-free alternative to physical wholesale auctions,” said John Lauer, president of CARWAVE. “KAR has truly embraced these core principles, and their progressive approach continues to lead the digital transformation of our industry. Our two organizations share a passion for innovation, a dedication to customer service and a commitment to making wholesale easy. And we look forward to combining our great networks of trusted dealers and delivering the best, most convenient and profitable wholesale solutions possible.”

The purchase price of the acquisition is $450 million and the transaction is expected to close prior to year-end pending the requisite legal and regulatory approvals. Winston & Strawn LLP is serving as legal advisor to KAR Global. Latham & Watkins LLP is serving as legal advisor to CARWAVE.

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