Item 1.01 Entry into a Material Definitive Agreement.
On February 24, 2022, Carvana Co. (the “Company”) entered into a definitive agreement to acquire the U.S. physical auction business of ADESA, Inc. (“Adesa”) from KAR Auction Services, Inc., for approximately $2.2 billion (the “Purchase Agreement”). The Company plans to finance the acquisition through the issuance of new debt financing that has already been committed, described below. The Company’s obligation to fund the purchase price of the acquisition is not subject to a financing contingency or condition.
In connection with the Purchase Agreement, the Company also entered into a commitment letter (the “Commitment Letter”) with certain financial institutions, in which such financial institutions agreed to provide the Company with an aggregate of $3.275 billion of debt financing facilities (the “Acquisition Finance Facilities”). The Acquisition Finance Facilities will serve to (a) finance the cash consideration agreed upon in the Purchase Agreement, (b) pay certain associated costs and expenses and (c) provide for certain working capital needs and general corporate purposes, including investing in improvements at facilities acquired pursuant to the Purchase Agreement. The Acquisition Finance Facilities will be financed by a syndicate of lenders led by JPMorgan Chase Bank, N.A. and Citi. The Commitment Letter contains, and any definitive financing documentation entered into in connection with the Commitment Letter will contain, customary conditions, representations and warranties, events of default, and covenants for transactions of this type.
The Purchase Agreement has been approved by the Boards of Directors of both companies. The acquisition is expected to close during the second quarter of 2022, subject to the satisfaction or waiver of customary closing conditions.
Item 7.01 Regulation FD Disclosure
A copy of the press release announcing the above-referenced transaction is furnished as Exhibit 99.1 to this Current Report on Form 8-K (this “Current Report”). In addition, on February 24, 2022, the Company posted an investor presentation related to the transaction on its investor relations website, at https://investors.carvana.com/events-and-presentations.
The information “furnished” pursuant to this Item 7.01, including Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Forward-Looking Statements
This Current Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current expectations and projections with respect to, among other things, our ability to complete and obtain the benefits of the acquisition of the U.S. assets and operations of Adesa, our financial condition, results of operations, plans, objectives, future performance, and business. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “can,” “could,” “may,” “should,” “would,” “will,” the negatives thereof and other words and terms of similar meaning. Forward-looking statements include all statements that are not historical facts. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Among these factors are risks related to the “Risk Factors” identified in the Company’s Annual Report on Form 10-K for 2021.
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