PROPOSED BUSINESS COMBINATION: Carlotz
IMPLIED ENTERPRISE VALUE: $827 million
ANTICIPATED SYMBOL: LOTZ
Acamar Partners Acquisition Corp. proposes to combine with CarLotz, Inc., one of the largest privately-held used vehicle retail disruptors with the industry’s only consignment-to-retail sales platform. At closing, anticipated in the fourth quarter of 2020, the combined company will be named CarLotz, Inc. and is expected to remain listed on Nasdaq and trade under the new ticker symbol LOTZ.
CarLotz is the industry’s only consignment-to-retail sales model and its asset-light inventory sourcing model, CarLotz offers a compelling value proposition for both vehicle buyers and sellers, resulting in significant market share expansion opportunities in the massive and fragmented used vehicle industry.
CarLotz’ proprietary technology and omni-channel marketplace provide consumers a seamless, worry and hassle-free user experience that eliminates the frustrations often experienced in the car buying and selling process. Additionally, CarLotz pioneered Retail Remarketing™, which enables corporate sellers of vehicles to access the financial benefits of direct-to-retail sales opportunities as opposed to settling for wholesale prices through a vehicle auction. Today, as the only consignment-to-retail service provider in the industry, CarLotz serves not only consumers seeking to sell a used vehicle but also many of the largest corporate vehicle remarketers in banking, rental, fleet management, original equipment manufacturers and other markets. CarLotz has built a team and culture around transparency, integrity, customer service and fun, which drives the Company’s decisions and has helped achieve some of the best net promoter scores in the used vehicle industry.
CarLotz Investment Highlights
- The highly-fragmented, $841 billion U.S. used vehicle market is ripe for disruption with less than 1% e-commerce penetration and less than 0.1% Retail RemarketingTM penetration today, providing a significant market share opportunity for CarLotz.
- CarLotz offers a compelling value proposition for corporate vehicle sourcing partners and retail sellers who, on average, receive approximately $1,000 more for their vehicles, net of all fees and expenses, than when utilizing the alternative wholesale sales channel (e.g., auction, trade-in, etc.).
- Customers who buy their vehicles from CarLotz also share in the upside created by CarLotz’ pioneering consignment-to-retail sales model, which on average saves up to $1,000 as compared to traditional used car dealerships.
- CarLotz’ contactless end-to-end e-commerce capabilities give buyers the opportunity to transact the way they’re most comfortable: on the internet, over the phone or in-person.
- The industry’s only asset-light consignment sales model, with 90% of CarLotz’ vehicles non-competitively sourced and 60% sourced from its corporate vehicle sourcing partners, enables CarLotz to operate without the need for significant capital or capital at risk to support traditionally owned inventory.
- CarLotz is the only omni-channel used vehicle business that makes it possible for corporate vehicle sourcing partners to sell their vehicle inventory at retail prices. CarLotz’ proprietary Retail RemarketingTM technology is fully integrated with those of its corporate vehicle sourcing partners providing an easy and seamless remarketing experience, as well as industry leading reporting, data analytics, pricing information and vehicle triage decision-making.
- The transaction is priced at a multiple of 0.88X estimated revenue for fiscal 2022 and a multiple of 6.8X estimated gross profit for fiscal 2022, a meaningful discount to CarLotz’ publicly traded peers.
The transaction implies a pro forma enterprise valuation for CarLotz of $827 million, or 0.88x 2022 estimated revenue of $945 million and 6.8x 2022 estimated gross profit of $121 million.
Existing CarLotz shareholders will roll over the vast majority of their existing equity, retaining 59% of the combined company’s pro forma equity.
The transaction will be fully funded by a combination of Acamar Partners’ up to $311 million cash-in-trust and $125 million of PIPE proceeds, which have been fully committed by a pool of institutional and strategic investors, enabling the combined entity to retain up to $321 million of cash following the transaction (assuming no redemptions by Acamar Partners’ existing shareholders) to support working capital and fund the Company’s growth.
- Certain accredited investors (the “PIPE Investors”), including affiliates of the Sponsor and CarLotz, entered into subscription agreements (the “PIPE Subscription Agreements”) pursuant to which the PIPE Investors have committed to purchase 12,500,000 shares of Company Common Stock (the “PIPE Shares”) at a purchase price per share of $10.00 and an aggregate purchase price of $125,000,000.
- PIPE Investors include:
- Fidelity Management & Research Company LLC
- KAR Global (NYSE: KAR, the parent company of ADESA and TradeRev),
- McLarty Diversified Holdings (founded by Franklin McLarty, former CEO of one of the largest U.S. automotive dealership groups),
- Rick Wagoner (the former CEO of General Motors) and
- TRP Capital Partners (existing investor and leading private equity fund in the transportation sector)
- Acamar Partners
- CarLotz Co-Founder and Chief Executive Officer Michael Bor
The Sponsor agrees that it shall not transfer any shares of the Company’s Class B common stock (or any shares of Company Common Stock issuable upon conversion thereof) (the “Sponsor Shares”) until:
- With respect to 50% of such Sponsor Shares, the earliest of
- (A) one year after the completion of the Merger,
- (B) subsequent to the Merger, if the closing trading price of the Company Common Stock equals or exceeds $12.00 per share (as equitably adjusted for stock splits, stock dividends, special cash dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the Company Common Stock) over any 20 trading days within any 30 trading day period commencing 150 days after the Closing Date and
- (C) the date following the completion of the Merger on which a Change of Control with respect to the Company is consummated that will result in the holders of the Company Common Stock receiving a per share price equal to or in excess of $10.00 (as equitably adjusted for stock splits, stock dividends, special cash dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the Company Common Stock).
- With respect to 25% of such Sponsor Shares,
- The date on which the closing trading price of the Company Common Stock has been greater than $12.50 per share (as equitably adjusted for stock splits, stock dividends, special cash dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the Company Common Stock) over any 20 trading days within any 30 trading day period commencing 150 days after the Closing Date; and
- With respect to 25% of such Sponsor Shares,
- The date on which the closing trading price of the Company Common Stock has been greater than $15.00 per share (as equitably adjusted for stock splits, stock dividends, special cash dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the Company Common Stock) over any 20 trading days within any 30 trading day period commencing 150 days after the Closing Date.
NOTABLE CONDITIONS TO CLOSING
- After taking into account the PIPE Investment and after giving effect to exercise their right to redeem, immediately prior to Closing and without giving effect to any of the other Transactions, the Company shall have, on a consolidated basis, at least $175,000,000 in cash and cash equivalents
NOTABLE CONDITIONS TO TERMINATION
- By either the Company or CarLotz if the Closing has not occurred on or before February 26, 2021 (the “Outside Date”)
- If the stockholders of the Company approve an extension of the date required to consummate a “business combination”, the Outside Date shall automatically be extended to the earlier of (i) such extension date and (ii) March 31, 2021
- Deutsche Bank Securities serving as lead financial and capital markets advisor to Carlotz
- Barclays serving as financial and capital markets co-advisor to Carlotz
- William Blair serving as capital markets co-advisor to Carlotz
- Freshfields Bruckhaus Deringer serving as legal counsel to Carlotz
- Acamar Partners advisors include Goldman Sachs as sole financial advisor and placement agent for the PIPE
- Simpson Thacher & Bartlett serving as legal counsel to Acamar Partners
ACAMAR PARTNERS MANAGEMENT & BOARD
Luis Ignacio Solorzano Aizpuru, 46
Chief Executive Officer and Director
Mr. Solorzano began his career with BankBoston Capital, where he spent four years making private equity investments and corporate loans across Latin America. In 2001, Mr. Solorzano joined Advent International becoming a Partner and Managing Director in 2008. He became head of the Mexico office in 2012 and served as Chairman of the Latin America’s Investment Committee from 2013 to 2017. He is a co-founder of Brabex Capital, an investment management firm. Mr. Solorzano obtained an Economics degree (cum laude) from the Instituto Tecnologico Autonomo de Mexico (ITAM) and an MBA from Harvard Business School. Mr. Solorzano has served on the boards of various public and private companies, including Dufry, Grupo Aeroportuario del Centro Norte S.A.B. (OMA), Latin American Airport Holdings, Aerodom, InverCap Holdings, Grupo Financiero Mifel and Viakem.
Raffaele R. Vitale, 56
Mr. Vitale began his career in the Corporate Finance department of Chase Manhattan Bank, where he worked in a variety of roles, including commercial lending, leveraged finance, M&A and technology, media and telecom banking coverage in New York, London and Milan. In 1993, he was one of the founding partners of Vitale Borghesi & C. S.p.A., an independent financial advisory company that became part of the Lazard Group in 1998. Throughout his tenure at Chase Manhattan Bank, Vitale Borghesi & C. and Lazard Group, Mr. Vitale was deeply involved in numerous M&A transactions. In 2002, Mr. Vitale joined PAI Partners, where he was responsible for investments in Italy and, starting in 2016, he started and ran the US business. Mr. Vitale has been a member of PAI’s Investment Committee from 2006 to 2018 and Executive Committee, from 2009 to 2017. Mr. Vitale currently serves on the board of Marcolin S.p.A. and has additionally served on the boards of Saeco Group S.p.A., Gruppo Coin S.p.A. and Nuance AG. Mr. Vitale graduated with a degree in Business Administration from Rollins College.
Joseba Asier Picaza Ucar, 38
Chief Financial Officer and Secretary
Mr. Picaza began his career with JPMorgan’s Corporate Derivatives team in London, providing tailored derivative solutions to Spanish and Portuguese corporate, institutional and HNWI clients. In 2010, Mr. Picaza joined Morgan Stanley’s Strategic Equity Derivatives team, part of the Global Capital Markets division, expanding his coverage to Southern European, German, Swiss, Scandinavian and financial sponsor clients. As part of this role, Mr. Picaza was often involved in M&A and/or capital market transactions that required addressing specific economic, accounting, tax, legal and/or regulatory matters. In 2015, Mr. Picaza started his own financial advisory and structuring firm, High Seven Ltd. Mr. Picaza obtained a degree in Management and Business Administration (majoring in Finance and Marketing) from Universidad de Deusto in Spain.
Juan Duarte Hinterholzer, 40
Chief Operating Officer
Mr. Duarte started his career with Procter & Gamble as a financial analyst. In 2002, he joined the Boston Consulting Group, working on strategy, cost reduction and operational efficiency projects for multiple clients across a broad range of sectors. In 2006, Mr. Duarte joined JPMorgan as an Associate working in corporate finance and business development functions in the New York and Tokyo offices. In 2007, Mr. Duarte joined Advent International where he worked until 2017. Mr. Duarte has served on the boards of various public and private companies such as Inmobiliaria Fumisa, Latin American Airport Holdings, InverCap Holdings, Viakem and Grupo Gayosso. He is also co-founder of Brabex Capital, an investment management firm. Mr. Duarte graduated as an Industrial and Systems engineer (magna cum laude) from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) and with an MBA (with honors) from Cornell University Graduate School of Management.
Board of Directors
Juan Carlos Torres Carretero, 69
Chairman of the Board of Directors
Mr. Torres began his career in the petroleum industry before working as a consultant at McKinsey & Co. for five years. Mr. Torres subsequently became CEO and President of Seapharm Inc. and founded Pharmamar, a company that explored marine organic pharmaceutical agents. In 1988, he joined Advent International, first working in their Boston office and then in Madrid. In 1995, Mr. Torres moved to Mexico City as Managing Partner and Co-CEO of Advent Latin American Private Equity Fund until 2015. He has served as the Executive Chairman of Dufry since 2004. He also serves on the board of various public companies such as Dufry, Moncler and Hudson (of which he is also Chairman) and has served on the board of other public companies such as International Meal Company Alimentaçao S.A. and Dufry South America Ltd. Mr. Torres, earned a MSc. in Physics from Universidad Complutense de Madrid and a MSc. in Management from MIT Sloan School of Management.
Domenico De Sole, 75
Mr. De Sole is the co-founder of luxury retailer Tom Ford International, LLC and has been the Chairman of its board of directors since its formation in 2005. During this time, Mr. De Sole also advised TPG Capital Advisors, LLC in connection with the repositioning and sale of Bally International AG and advised Sandbridge Capital, LLC in connection with the purchase, repositioning and sale of Thom Browne, Inc. From 1984 to 1994, Mr. De Sole served as President and Chief Executive Officer of Gucci America, and, from 1994 to 2004, he served as the President and Chief Executive Officer of Gucci Group, a company he helped transform from an almost bankrupt monobrand company into one of the largest and most profitable luxury groups in the world which included brands such as Bottega Veneta, Yves Saint Laurent, Balenciaga, Stella McCartney, Alexander McQueen and Sergio Rossi. Previously, Mr. De Sole practiced law at the firm Patton, Boggs and Blow. Mr. De Sole has served on numerous public and private company boards of directors, including his current roles as Chairman of Tom Ford International, LLC, Chairman of Sotheby’s, director of Pirelli & C. S.p.A. and director of Ermenegildo Zegna. He formerly served as a director of Bausch & Lomb Incorporated, Delta Airlines, Inc., Gap, Inc., Newell Brands Inc., Procter & Gamble and Telecom Italia S.p.A. Mr. De Sole graduated from the University of Rome with a law degree and received an LLM from Harvard Law School where he served as a member of the Dean’s Advisory Board.
James E. Skinner [Appointed 2/20/20]
Class I Director
Mr. Skinner has held various senior management positions with Neiman Marcus Group, Inc. and its related and predecessor companies from June 2001 until his retirement in February 2016, including serving as Vice Chairman between July 2015 and February 2016, Executive Vice President, Chief Operating Officer and Chief Financial Officer between October 2010 and July 2015, and serving as Executive Vice President and Chief Financial Officer from 2007 to 2010. Mr. Skinner served as Senior Vice President and Chief Financial Officer of CapRock Communications Corp. in 2000 and from 1991 until 2000, Mr. Skinner served in several positions with CompUSA Inc., including Executive Vice President and Chief Financial Officer beginning in 1994. Mr. Skinner also served as a partner with Ernst & Young from 1987 until 1991. Mr. Skinner serves on the board of directors of (i) Fossil Group, Inc. (NASDAQ:FOSL), a global design, marketing and distribution company of consumer fashion accessories, (ii) Hudson Ltd. (NYSE: HUD), one of the largest travel retailers in North America, and (iii) Ares Commercial Real Estate Corporation (NYSE: ACRE), a specialty finance company that originates and invests in commercial real estate loans and related investments. Mr. Skinner holds a B.B.A. from Texas Tech University and is a certified public accountant in Texas.
Teck Wong [Appointed 7/15/20]
Mr. Wong was recently a Managing Director of the Blackstone Alternative Asset Management (“BAAM”) Hedge Fund Solutions Group and a member of the BAAM Special Situations Investing Group until December 2019. During Mr. Wong’s time at BAAM, his responsibilities included managing the Group’s investments in special purpose acquisition companies. Before joining BAAM in January 2018, Mr. Wong was a co-founder and Chief Investment Officer at Arrakasta Capital, starting in August 2015. Before the launch of Arrakasta Capital, Mr. Wong was a Managing Director and a Portfolio Manager at CarVal Investors from 2008 to 2014, overseeing investments in corporate, structured and distressed credits, and special situations equities. Mr. Wong began his investment career as a Senior Credit Analyst at Loews Corporation from 2003 to 2005, and then as a Director in distressed and special situations at Ramius Capital from 2005 to 2008. Prior to that, Mr. Wong worked as a proprietary trader at J.P. Morgan from 1996 until 1999. He also served as a co-founder and Director of Business Development at Q-Wireless from 2001 to 2002. Mr. Wong received a Bachelor’s degree, with distinction, in Economics and Asian Studies from Cornell University, and a Master of Business Administration degree from Harvard Business School.