KAR Shares Surged over 48% in Morning Trading. Carvana to buy KAR Global's U.S. vehicle auction business for over $2 billion.
Online used-car seller Carvana has agreed to buy KAR Global's vehicle auction business in the United States for $2.2 billion to boost its physical presence and maintain growth as a pandemic-induced boom fades.
The deal for ADESA's U.S. unit announced on Thursday gives Carvana access to a business that brought in over $800 million in revenue last year and has 56 physical sites.
Carvana posted strong sales early on in the pandemic as a thin supply of new cars drove up prices of used vehicles, but its growth has slowed in the past few quarters.
It said on Thursday that revenue jumped 105% in the fourth quarter to $3.75 billion, compared with a 125% rise in the previous three months.
"Carvana and ADESA U.S.'s footprints are highly complementary and combining them extends the collective reach of the two businesses," the used-car seller said.
It added that when fully utilized, ADESA's reconditioning operations can add about 2 million units to its annual production.