Years from now, there’s a distinct chance that humanity will look at blank check firms, better known as special-purpose acquisition companies (SPACs), with disdain. Today is not that day, however. Cazoo Ltd, which has often been called the British Carvana, is reportedly selling itself to Ajax Holdings for a breezy $7 billion USD.
While the used-vehicle retailer initially planned on an initial public offering in London, merging with Ajax Holdings means it’s to be listed on the NYSE and probably at an astronomical price if the history of SPACs are anything to go by. This one happens to be owned by American billionaire and career hedge fund manager Dan Och, who said he would like to join the company’s board once the deal has gone through.
“The combination with special-purpose acquisition company Ajax I will raise about $1.6 billion in proceeds for the company, including $805 million in a cash trust from the SPAC and another $800 million from Ajax’s sponsors,” the company informed Bloomberg.
Cazoo is prioritizing digital vehicle sales and has been “pioneering the shift to online car buying in Europe and since being founded in 2018” by its own admission. Interestingly it’s also one of Europe’s leading car subscription services — despite it focusing primarily on secondhand automobiles. Its stated goal is to “digitally disrupt” the $700 billion European used car market by keeping as much of its operations in the digital realm as possible. That, in addition to its swift growth, has made outside parties particularly interested in the company’s future prospects.
As one of Europe’s fastest-growing businesses, Cazoo expects to achieve revenues approaching $1bn in 2021, a growth rate of more than 300 [percent] in its second full year of operations and has already built a team of over 1,800 across the UK, Germany, France and Portugal. The company will continue to be led by its Founder & CEO, Alex Chesterman OBE, along with its world class management team. AJAX’s founder [sic], Dan Och, will join the combined company’s Board of Directors.
This transaction will support Cazoo’s mission to continue to transform the car buying experience across Europe, with the proceeds funding the further build out of its brand and infrastructure. With its best-in-class and unique consumer proposition and fully integrated model, Cazoo is well positioned to take advantage of the shift to online car buying and disrupt the huge and highly fragmented European car buying market.
Och praised the deal, stating that he was extremely confident Cazoo would “lead the way in this massive, untapped market opportunity,” while Chesterman promised the company would be putting the $1 billion it’s getting will be put to use to corner the used car market online.