KAR Auction Services Inc. said Wednesday it has agreed to buy Belgium-based online auction company CarsOnTheWeb for about 156 million euros ($176 million).
The potential purchase price includes 91 million euros in cash ($103 million) and 65 million euros ($73 million) in additional payment over a specified time period based on performance and other terms being met. Pending regulatory approval, the transaction is expected to close in the first quarter of 2019.
The acquisition is not the first, nor the last, in KAR's international expansion strategy, KAR CEO Jim Hallett said.
"I would say we're still in what I would consider the first half of our international strategy," Hallett said.
Prior to the pending acquisition, KAR's European presence was limited to the United Kingdom, with its ADESA UK business unit. With the purchase, KAR would essentially cover all of Europe: CarsOnTheWeb has sales operations in Belgium, France, Germany, Italy, the Netherlands and Spain, and connects sellers in those countries with buyers in 50 European countries. The company's online and mobile tools are available in 19 languages.
CarsOnTheWeb's handling of value-added tax conversions and general cross-border transactions made it especially attractive to KAR, the company said in a release. About 97 percent of its transactions are cross-border. About 42,000 vehicles were sold through the company last year, and it has some 40,000 registered dealers.
KAR plans to leverage the Belgian firm's technology, data analytics and other services across the continent. Hallett said CarsOnTheWeb fits into an international strategy that utilizes an "asset-light" model. The company is online-focused, with limited brick-and-mortar presence.
