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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 24, 2022

 

 

CARVANA CO.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-38073   81-4549921
(State or other jurisdiction
of incorporation)		   (Commission
File Number)		   (I.R.S. Employer
Identification No.)

1930 W. Rio Salado Parkway

Tempe, Arizona 85281

(Address of principal executive offices)

Registrant’s telephone number, including area code: (480) 719-8809

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

☐

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading
Symbol(s)

  

Name of each exchange
on which registered

Class A Common Stock, Par Value $0.001 Per Share   CVNA   New York Stock Exchange

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

On February 24, 2022, Carvana Co. (the “Company”) entered into a definitive agreement to acquire the U.S. physical auction business of ADESA, Inc. (“Adesa”) from KAR Auction Services, Inc., for approximately $2.2 billion (the “Purchase Agreement”). The Company plans to finance the acquisition through the issuance of new debt financing that has already been committed, described below. The Company’s obligation to fund the purchase price of the acquisition is not subject to a financing contingency or condition.

In connection with the Purchase Agreement, the Company also entered into a commitment letter (the “Commitment Letter”) with certain financial institutions, in which such financial institutions agreed to provide the Company with an aggregate of $3.275 billion of debt financing facilities (the “Acquisition Finance Facilities”). The Acquisition Finance Facilities will serve to (a) finance the cash consideration agreed upon in the Purchase Agreement, (b) pay certain associated costs and expenses and (c) provide for certain working capital needs and general corporate purposes, including investing in improvements at facilities acquired pursuant to the Purchase Agreement. The Acquisition Finance Facilities will be financed by a syndicate of lenders led by JPMorgan Chase Bank, N.A. and Citi. The Commitment Letter contains, and any definitive financing documentation entered into in connection with the Commitment Letter will contain, customary conditions, representations and warranties, events of default, and covenants for transactions of this type.

The Purchase Agreement has been approved by the Boards of Directors of both companies. The acquisition is expected to close during the second quarter of 2022, subject to the satisfaction or waiver of customary closing conditions.

Item 7.01 Regulation FD Disclosure

A copy of the press release announcing the above-referenced transaction is furnished as Exhibit 99.1 to this Current Report on Form 8-K (this “Current Report”). In addition, on February 24, 2022, the Company posted an investor presentation related to the transaction on its investor relations website, at https://investors.carvana.com/events-and-presentations.

The information “furnished” pursuant to this Item 7.01, including Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Forward-Looking Statements

This Current Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current expectations and projections with respect to, among other things, our ability to complete and obtain the benefits of the acquisition of the U.S. assets and operations of Adesa, our financial condition, results of operations, plans, objectives, future performance, and business. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “can,” “could,” “may,” “should,” “would,” “will,” the negatives thereof and other words and terms of similar meaning. Forward-looking statements include all statements that are not historical facts. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Among these factors are risks related to the “Risk Factors” identified in the Company’s Annual Report on Form 10-K for 2021.

 

2

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
Number

   

Description

99.1    Press Release, dated February 24, 2022, related to the acquisition.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

3

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February 24, 2022

 

CARVANA CO.
By:  

/s/ Paul Breaux

Name:   Paul Breaux
Title:   Vice President, General Counsel and Secretary

Exhibit 99.1

 

LOGO

Carvana to Accelerate Growth Through Acquiring ADESA U.S. Physical Auction Business from KAR Global

 

  •  

Proposed transaction will provide significant infrastructure and team to expand and enhance Carvana’s customer offering with a broader selection of vehicles and even faster delivery times

 

  •  

At full utilization, ADESA U.S. reconditioning operations expand Carvana annual production capacity by 2M+ units to over 3M

 

  •  

78% of U.S. population will be within 100 miles of a Carvana inspection and reconditioning center once ADESA’s 56 U.S. sites are fully built out within Carvana’s production network

 

  •  

Carvana will continue to operate and expand ADESA auction business under the leadership of ADESA President John Hammer

PHOENIX – Feb. 24, 2021 embargoed until 2:05 p.m. MST – Carvana (NYSE: CVNA), the industry pioneer for buying and selling cars online, has signed a definitive agreement to acquire ADESA’s US physical auction business (“ADESA U.S.”), a wholly owned subsidiary of KAR Global (NYSE: KAR), subject to customary closing conditions, for $2.2 billion in cash. ADESA U.S. is the second largest provider of wholesale vehicle auction solutions in the United States with 56 sites and approximately 4,500 corporate and operations team members. In 2021, the ADESA U.S. business facilitated more than one million transactions through those sites, which total approximately 6.5 million square feet of buildings on more than 4,000 acres.

“We are thrilled to welcome ADESA U.S. to the Carvana family. Together with Carvana’s existing operations, ADESA U.S.’s nationwide infrastructure network and robust, highly profitable business will accelerate Carvana’s progress toward becoming the largest and most profitable automotive retailer,” said Ernie Garcia, Carvana Founder and CEO. “Over time, we will leverage our combined infrastructure and complementary expertise to deliver even better selection, better value, and faster delivery times to our retail customers while simultaneously raising the bar and providing more access and better experiences to our wholesale customers.”

Carvana and ADESA U.S.’s footprints are highly complementary and combining them extends the collective reach of the two businesses. ADESA U.S.’s existing and potential reconditioning operations can contribute 2M+ incremental units to Carvana’s annual production at full utilization. Further, 78% of the U.S. population lives within 100 miles of either an ADESA U.S. or existing Carvana inspection and reconditioning center, meaning customers will have access to more vehicles with faster delivery times than ever before.

“ADESA earned its place as a respected brand in our industry because of its dedicated team and robust operations,” Garcia said. “We have long admired ADESA, having come to appreciate their approach as a customer for many years. We look forward to joining forces and continuing on the path of delivering the best customer offering for both retail and wholesale customers.”

Carvana will continue to operate ADESA U.S.’s existing wholesale auction business and related services under the ADESA brand. ADESA U.S. President John Hammer additional senior and executive leadership and teams will transition to Carvana after the deal is closed. The ADESA U.S. business generated over $800M of revenue and over $100M of EBITDA* in 2021.

“ADESA and Carvana are committed to ensuring a smooth, seamless transition for the ADESA U.S. physical auction customers,” said John Hammer, President of ADESA. “We look forward to bringing our innovative teams together and combining the power of our physical auction and retail capabilities to better serve buyers, sellers and consumers across the automotive industry.”

Carvana has received committed financing of up to $3.275B from JPMorgan Chase Bank N.A. and Citi and intends to fund the purchase price and an additional $1 billion in improvements across the 56 sites through a committed debt financing.

Carvana is advised by Citi and J.P. Morgan Securities LLC as financial advisors and Kirkland & Ellis LLP as legal counsel .

LOGO

 

Carvana Investor Relations will host a conference call to discuss this transaction and its fourth quarter and full year 2021 earnings on Thursday, February 24, 2022 at 5:30 p.m. EST: Webcast and Live Call at (833) 255-2830.

*EBITDA of the ADESA U.S. business is a non-GAAP financial measure. A reconciliation of EBITDA to net income of the ADESA U.S. business can be found in the investor presentation related to this transaction, and posted on Carvana’s website at https://investors.carvana.com/events-and-presentations.

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About Carvana (NYSE: CVNA)

Founded in 2012 and based in Phoenix, Carvana’s (NYSE: CVNA) mission is to change the way people buy and sell cars. With a continued focus on its customers, technology and innovation, Carvana offers an intuitive and convenient online car buying, selling, and financing experience. Carvana.com enables customers to quickly and easily shop more than 55,000 vehicles, finance, trade in or sell their current vehicle to Carvana, sign contracts and schedule delivery or pickup at one of its patented, automated Car Vending Machines. Carvana is a Fortune 500 company, providing as-soon-as-next-day delivery to customers in over 300 U.S. markets. For further information on Carvana, please visit www.carvana.com, or connect with us on Facebook, Instagram, Twitter, YouTube or the Carvana Blog.

Contacts:

Investors

Mike Levin

investors@carvana.com

Media

Kristin Thwaites

press@carvana.com