CarLotz to merge with San Francisco’s Shift
Deal expected to close in fourth quarter
Richmond-based CarLotz Inc., the nation’s largest consignment-to-retail used vehicle business, will merge with San Francisco-based Shift Technologies Inc., a similar platform on the West Coast, the companies announced Tuesday.
The companies will combine in a stock-for-stock merger, according to a news release and will trade on Nasdaq under SFT. At the close, the new company will have a cash position of about $125 million, according to a news release. CarLotz’s stock was trading at 57 cents per share on Tuesday; the stock has gradually fallen from its January 2021 height of $11.92 per share, hitting a low of 40 cents per share last month.
CarLotz and Shift have complementary geographies, with CarLotz’s strong presence in the mid-Atlantic and Shift’s West Coast footprint.
“While this is an exciting day for both companies, the merging of Shift and CarLotz will be most beneficial to consumers looking to buy or sell a used car,” CarLotz CEO Lev Peker said in a statement. “Shift’s technology and consumer sourcing abilities combined with our consignment and retail remarketing expertise will provide one extraordinary, omnichannel experience.”
Shift’s CEO also released a statement.
“The Shift and CarLotz teams have admired each other and our respective businesses for quite some time. We’ve always seen a considerable amount of strategic and cost synergies with a combined entity,” Shift co-founder, CEO and Chairman George Arison said in a statement. “We are strongly convinced that the merger will put us in a position to pursue a profitable future. As such, this is a transformative moment in Shift’s history by enabling us to advance our vision to be the end-to-end destination for car ownership that controls its own destiny.”
Under the terms of the merger agreement, CarLotz shareholders are expected to receive approximately 0.692158 shares of Shift common stock for each share of CarLotz common stock, according to the release.
The deal is expected to close in the fourth quarter, subject to CarLotz’s and Shift’s shareholders approvals and other regulatory approvals. Arison will step down as CEO of Sept. 1, but will remain in his position as board chairman; Shift President Jeff Clementz will succeed him as CEO.
CarLotz was founded in 2011 in Chesterfield County before expanding nationwide. It went public in January 2021 after partnering with Acamar Partners Acquisition Corp., a SPAC. Last year, CarLotz announced an expansion of its headquarters in Richmond that would create 192 jobs. Peker, who is based in Los Angeles, took over as CEO of CarLotz in April; he had previously served as CEO of CarParts.com, an online retailer of automotive parts and accessories. He replaced CarLotz co-founder Michael Bor, who left the company in March.
CarLotz’s net revenue in 2021 increased 118% to $258.5 million, from $118.6 million in 2020. Tuesday, the retailer reported its second quarter 2022 earnings, which rose 51% to $76.5 million, up from $50.8 million during the same period in 2021. Retail sales increased 21% from the same period last year.