KAR Global said Tuesday that it has completed the sale of its ADESA U.S. auction unit to Carvana Co.
The deal will allow KAR to focus on its online dealer-to-dealer businesses and enable Carvana to gradually boost the number of cars and trucks it can get ready for sale each year.
Carvana purchased ADESA U.S. from KAR Global for $2.2 billion. KAR, a Carmel, Ind.-based wholesale auctions provider, agreed to sell the physical auction unit in late February.
The deal hands Carvana the keys to 56 ADESA sites across the U.S., totaling about 6.5 million square feet of buildings on more than 4,000 acres. It also gives Carvana all staff and operations at the 56 locations, plus sole use of the ADESA.com marketplace in the U.S.
"We aim to use this ADESA U.S. alignment to both improve the experiences of the ADESA U.S. physical auction customers and to focus on significant and sustainable efficiencies, and unit economic improvements, for Carvana to catapult back into rapid, profitable growth as the industry inevitably rebounds," Carvana CEO Ernie Garcia said in a news release.
"We believe the future is digital, and the channel shift towards digital across our industry is gaining momentum," KAR Global CEO Peter Kelly said in a news release. "KAR is now better positioned than ever to lead this evolution and capture the broad opportunities ahead."
Carvana shares slipped 16.6 percent on Monday but were rising 0.6 percent to $39.02 in premarket trading on Tuesday.
The deal's closure comes just weeks after Carvana reported a disappointing first quarter, in which the company recorded a net loss of $506 million and retailed fewer vehicles than it had planned for because of increasing interest rates, dwindling consumer confidence and other snafus that are being felt throughout the industry.