NEW YORK – Another blockbuster acquisition in the used-car space surfaced Tuesday, this time involving both the retail and auto finance segments.
Vroom said it has reached a deal to purchase United Auto Credit Corp. for $300 million in cash, subject to adjustment depending on the closing book value of United Auto Credit.
The acquisition would further push Vroom into building captive financing capabilities. Additionally, integrating United Auto Credit’s non-prime financing capabilities can help allow consumers from additional credit tiers to purchase on the Vroom platform, the company said.
United Auto Credit will be added to the existing lineup of auto finance options on the Vroom platform. Meanwhile, both companies will work on integrating United Auto Credit’s services and build Vroom’s captive finance operation.
United Auto Credit chief executive officer Jim Vagim as well as managing director and chief financial officer Ravi Gandhi will remain in their positions.
When the deal closes, United Auto Credit will continue to operate under its current name and will become an indirect wholly owned Vroom subsidiary. The deal is expected to close late this quarter or early in the first quarter of 2022.
“Competitive financing is a fundamental component of Vroom’s value proposition and adding proprietary lending capabilities unlocks significant value for our business and our customers,” Vroom CEO Paul Hennessy said in a news release.
“We were impressed with the UACC team’s depth of expertise, as well as their commitment to their customers, and are thrilled to have them as part of the team as we advance our lending offering and continue our asset-light approach to scaling our business,” he said. “The transaction represents a meaningful strategic opportunity, with significant potential for enhancing aggregate gross profit and improving customer satisfaction.”
Vagim added: “We have always been focused on providing as many consumers as possible the chance at vehicle ownership through our deep lending capabilities and market expertise. We’re excited to continue this mission by becoming part of the Vroom team and working together to facilitate transactions for even more consumers.”
