KAR Global has agreed to buy BacklotCars Inc., an online dealer-to-dealer vehicle wholesaling platform, for $425 million. The purchase is expected to be complete by the end of the year, pending legal and regulatory approvals.
KAR sees the acquisition as one that will diversify its digital offerings while also building on the foundation of TradeRev, the auction firm's mobile vehicle-trading platform.
"BacklotCars has grown rapidly in the highly competitive dealer-to-dealer space and is the perfect complement to our current capabilities and footprint," KAR CEO Jim Hallett said in a release Tuesday. "I'm confident the addition of Backlot's leadership, technology and exceptional customer-service model will quickly benefit our combined customers, enhance KAR's competitive position and accelerate growth for both organizations."
BacklotCars was founded in Kansas City, Mo., in 2015 and is now used by dealers in 46 states. The company's co-founders — Justin Davis, Ryan Davis, Josh Parsons and Fabricio Solanes — will remain with the firm once the transaction is complete, and KAR said it intends to keep BacklotCars' headquarters in Kansas City.
Guggenheim Securities is the financial adviser for the transaction for KAR Global, with Winston & Strawn LLP as legal adviser. Evercore is the financial adviser to BacklotCars, with Stinson LLP as legal adviser.
Shares of KAR closed Tuesday's trading down 2.5 percent to $17.21.