By James Hickey
Managing Editor, DigitalDealer.com
CarGurus will acquire the remaining minority equity interests in CarOffer for $75 million through an all-cash transaction, a deal expected to close next month.
CarGurus acquired a 51% stake in CarOffer in 2021 with the ability to buy the remaining equity interest over the next three years. The decision announced on Nov. 7 to expedite this purchase reflects CarGurus’ goal to capture rising opportunities to strengthen operations between the two platforms and accelerate plans for solutions that power its development of a transaction-enabled platform supporting dealers and consumers through every stage of the automotive lifecycle, according to company officials.
“Our work with CarOffer has unlocked meaningful opportunities to better serve our customers by integrating the scale and reach of our retail platform with CarOffer’s digital wholesale capabilities,” said Jason Trevisan, CEO of CarGurus. “As we aim to accelerate this progress to enhance the consumer and dealer experience even further, we believe that now is the right time to fully invest in CarOffer so we can be more agile in scaling solutions.”
Changes at CarOffer
CarOffer Founder and CEO Bruce Thompson will step down upon completion of the acquisition. Zach Hallowell, CarGurus Head of Industry Transformation, will lead the CarOffer business after the deal is finalized.
“I look forward collaborating with Zach during this transition period as I focus on my next journey, and believe the team is in a great position to continue expanding on the momentum we’ve built together,” stated Thompson.
Prior to joining CarGurus, Hallowell led the development and subsequent scaling of digital solutions for some of the largest players in the wholesale space, including Manheim Auctions’ digital wholesale marketplace at Cox Automotive and as vice president of Product at Openlane.
“I extend my appreciation to Bruce for his leadership and collaboration as we transition Zach into this role,” said Trevisan. “With over 20 years of leadership experience with the largest digital wholesale platforms in the market, I am confident in Zach’s ability to guide the next chapter of CarOffer’s growth.”
Officials from both companies said CarOffer will continue to operate as a standalone brand in Addison, Tx.
Buy Back Plan
The news comes as shares of CarGurus rose more than 6% after the online car marketplace reported third-quarter results that were above Wall Street expectations. CarGurus earned $22.3 million in the quarter.
Officials said its board has authorized a $250 million share buyback program they see as underscoring the company’s commitment to using its strong cash flow to enhance shareholder value.
“We are excited by the trajectory of our platform and rapid innovation,” said Trevisan. “Looking ahead, we believe our accomplishments and trend lines exiting this year, coupled with our decision to accelerate our purchase of the remaining stake in CarOffer, set the stage for continued financial growth and innovation in 2024 that will serve well our dealer partners and largest consumer audience.”
