KAR Global has agreed to buy Carwave, an online dealer-to-dealer marketplace, in an all-cash transaction valued at $450 million.
KAR, which owns auction giant ADESA, said in a release Monday that the purchase will build on the company's growth in the dealer-to-dealer segment, enhance its position in the highly fragmented wholesale used-vehicle market and accelerate the firm's transformation to a digital marketplace company.
Carwave has a network of franchised and independent dealers in Arizona, Nevada, Oregon, Texas and California, where it was founded in 2009. The online platform allows dealers to wholesale and buy vehicles from anywhere. It's described in KAR's release as "displacing the $100 billion traditional brick-and-mortar wholesale automobile auction industry with its innovative, Internet-based business model."
The transaction, subject to typical regulatory approvals, is expected to close before the end of the year. After closing, Carwave's co-founders John Lauer and Bill Lauer will remain with the company, and KAR said it intends to have Carwave continue to operate out of its headquarters in Escondido, Calif.
KAR CEO Peter Kelly said in the release that Carwave has a strong, active dealer network in California, the country's largest wholesale market, as well as a growing presence in Arizona and Texas, and the acquisition will provide further growth while also giving each company's customers more choice through an expanded buyer and seller base.
"Carwave's asset-light, technology-forward business model, with approximately 100,000 vehicles sold over the past 12 months, will enable us to continue driving innovation, achieve immediate profitability across our dealer-to-dealer offerings and enhance our position in the highly competitive dealer-to-dealer space," Kelly said.