The merger will enable Cazoo to become a publicly-listed company
British online car retailer Cazoo has agreed to merge with blank cheque firm AJAX I in a deal that values the combined company at $7bn.
AJAX was founded as a special purpose acquisition company (SPAC) by US investor Dan Och in partnership with Glenn Fuhrman and certain strategic advisors.
The merger with the SPAC will enable Cazoo to go public, with a listing on the New York Stock Exchange (NYSE) under the ticker symbol CZOO.
Founded in 2018, the online car retailer is said to have delivered more than 20,000 cars to consumers in the UK.
The company is claimed to be among the major car subscription players with more than 6,000 subscribers in the UK, France, and Germany.
It is said to have developed an online car buying platform with a completely integrated model. Under this model, the company owns and reconditions all its cars prior to putting them up for sale on its website for delivery or collection within 72 hours.
Cazoo expects to register around $1bn in revenues this year. The company has a team of more than 1,800 people across the UK, France, Germany, and Portugal.
Post-merger, Alex Chesterman, Cazoo’s founder and CEO, will continue to lead the combined company.
Chesterman said: “This announcement is another major milestone in our continued drive to transform the way people buy cars across Europe.
“We have created the most comprehensive and fully integrated offering in the largest retail sector which currently has very low digital penetration.
“This deal will provide us with almost $1 billion of further funds to fuel our growth and I am delighted to be partnering with Dan and his team at AJAX to rapidly expand and deliver the best car buying experience to consumers across Europe.”
Proceeds from the deal will be used by the company for further developing its brand and infrastructure.
The deal includes up to $805m cash in trust held by AJAX and an $800m private investment in public equity (PIPE) at $10 per share led by the AJAX sponsors and D1 Capital Partners.
New and existing investors such as Altimeter, funds & accounts managed by BlackRock, Counterpoint Global (Morgan Stanley), Fidelity Management and Research, Mubadala Capital, Marcho Partners, Pelham Capital, and others are also taking part in the PIPE.
Cazoo’s existing shareholders will own a stake of nearly 79% in the combined company.
Dan Och said: “We are incredibly excited to have the opportunity to partner with Alex and the exceptional team at Cazoo. Alex has proven to be one of Europe’s most successful serial entrepreneurs and we are proud to be supporting the growth of this world-class team, brand and platform.
“With their constant focus on innovation, data and customer satisfaction, I have no doubt that Cazoo is going to continue to lead the way in this massive, untapped market opportunity and am looking forward to joining the Board of Cazoo and working with Alex and his team.”
The deal is subject to shareholders’ approval of both the merging companies, regulatory approvals, and other customary closing conditions. Upon meeting all the conditions, the deal is likely to close in Q3 2021.