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CARVANA CO. 8-K Report, Material Agreement (Feb 24, 2022)

Filed February 24, 2022For Securities:CVNA

Summary

Carvana Co. (CVNA) announced a significant strategic move on February 24, 2022, by entering into a definitive agreement to acquire the U.S. physical auction business of ADESA, Inc. for approximately $2.2 billion. This acquisition is poised to significantly expand Carvana's operational footprint and capabilities within the automotive remarketing sector. The company has secured committed debt financing totaling $3.275 billion to fund the acquisition, related expenses, and for general corporate purposes, indicating a non-contingent funding strategy. The transaction, approved by both companies' Boards of Directors, is expected to close in the second quarter of 2022, subject to customary closing conditions. The acquisition represents a substantial investment aimed at integrating a major physical auction platform into Carvana's predominantly online used car sales model, potentially creating a more comprehensive end-to-end solution for both consumers and dealers.

Key Highlights

  • 1Carvana to acquire ADESA's U.S. physical auction business for $2.2 billion.
  • 2Acquisition aims to enhance Carvana's presence in the automotive remarketing sector.
  • 3Financing for the acquisition is fully committed through $3.275 billion in new debt facilities.
  • 4The funding will cover the purchase price, expenses, and provide for working capital and general corporate purposes.
  • 5The transaction is not subject to a financing contingency.
  • 6Closing of the acquisition is anticipated in the second quarter of 2022.
  • 7The acquisition has received Board approval from both Carvana and ADESA.

Frequently Asked Questions

The acquisition of ADESA's U.S. physical auction business is expected to significantly expand Carvana's operational footprint and capabilities within the automotive remarketing sector. This move integrates a major physical auction platform into Carvana's existing online used car sales model, potentially creating a more comprehensive end-to-end solution for consumers and dealers.

Carvana has secured committed debt financing totaling $3.275 billion through new debt facilities. This financing will cover the $2.2 billion purchase price, associated costs, and will also provide for working capital and general corporate purposes, including facility improvements.

The acquisition is subject to the satisfaction or waiver of customary closing conditions. While the financing is secured and not contingent, other standard conditions typical for such transactions must be met.

The closing of the acquisition is expected to occur during the second quarter of 2022.