Used car consignment store CarLotz agrees deal to go public

Shift Technologies

22/10/2020 12:00

By Joshua Franklin
    NEW YORK, Oct 22 (Reuters) - CarLotz Inc said on Thursday it
has agreed to go public through a merger with blank-check
acquisition company Acamar Partners Acquisition Corp  ACAM.O 
which values the U.S. consignment store for used vehicles at
$827 million, including debt. 
    CarLotz would be the third major U.S. online car seller to
go public this year after Vroom Inc  VRM.O  and Shift
Technologies Inc  SFT.O , as online vehicle sales accelerate
during the coronavirus pandemic.
    As part of the deal, CarLotz will receive an injection of up
to $321 million which it plans to use to expand beyond its eight
sale and distribution locations. 
    "We feel like it's time to now go and take the giant leap
forward, expand nationally, become a fully national,
multi-billion dollar player in this industry," CarLotz
co-founder and Chief Executive Michael Bor said in an interview.
    "In order to do that we needed to raise a significant amount
of capital," Bor said. 
    Reuters reported Acamar was nearing a deal to buy CarLotz on
Wednesday.  urn:newsml:reuters.com:*:nL8N2H75N3
    Unlike Vroom and Shift which buy and then sell used cars,
Richmond, Virginia-based CarLotz operates a consignment platform
whereby it splits profits from sales made on its platform with
owners.
    CarLotz, which was founded in 2011, is "run-rate"
profitable, Bor said, citing a measure that extrapolates annual
levels from a smaller amount of data.
    Acamar Partners is a Nasdaq-listed special purpose
acquisition (SPAC), led by private equity investors Juan Carlos
Torres Carretero and Luis Ignacio Solorzano Aizpuru. 
    SPACs are shell companies which use initial public offering
(IPO) proceeds to acquire an unidentified private company, which
becomes public as a result.
    Merging with a SPAC has become a popular alternative to
going public in a traditional IPO, as it involves less
regulatory scrutiny and more certainty over the market valuation
and funds raised.
    For the deal, investors including Fidelity Management, car
auction service provider KAR Auction Services  KAR.N  and
ex-General Motors Co  GM.N  CEO Rick Wagoner have committed to
invest $125 million in a private investment in public equity
(PIPE).
    Acamar's ticker on Nasdaq will change to "LOTZ" after the
deal closes.
    Online sales only account for around 1% of the roughly $840
billion Americans spend annually on used cars. But after
numerous U.S. states went into COVID-19 lockdowns, the advantage
of socially distant online sales has come into focus.
    "We've probably seen an acceleration in the shift in
consumer willingness to do the vehicle transaction totally
online," Bor said. 
    CarLotz, which has around 125 employees, took a $1.7 million
U.S. government loan under the Paycheck Protection Program
(PPP), which the company expects to pay back, Bor said.

 (Reporting by Joshua Franklin in New York; Editing by Richard
Chang)
 ((joshua.franklin@thomsonreuters.com; +1 646-223-6356; Reuters
Messaging: joshua.franklin.thomsonreuters.com@reuters.net))