The deal will help Vroom expedite its strategy to create captive financing capabilities
Vroom, a US-based e-commerce platform for selling and buying used vehicles, has agreed to acquire automotive finance provider United Auto Credit Corporation (UACC) for $300m in an all-cash deal.
Based in California, UACC is a technology-enabled non-prime auto lender that caters to the independent dealer market. The company is said to have 25 years of auto lending experience.
Vroom said that the acquisition fast tracks its goal to create captive financing capabilities that will support growth in sales, boost the profitability of its units, and provide long-term value for its shareholders.
Through the integration of UACC’s non-prime lending capabilities, Vroom expects an increased number of consumers to avail themselves of the opportunity of transacting seamlessly on its platform.
Vroom CEO Paul Hennessy said: “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.
“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.
“The transaction represents a meaningful strategic opportunity, with significant potential for enhancing aggregate gross profit and improving customer satisfaction.”
UACC will be joining Vroom’s existing list of lenders available via its e-commerce platform.
The automotive finance provider will continue to sustain and grow its network of more than 7,300 dealers.
Post-acquisition, UACC will become an indirect fully-owned subsidiary of Vroom. It will continue to operate under the same existing name.
UACC president and CEO Jim Vagim said: “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.”
The deal, which is subject to regulatory approvals and other conditions, is expected to close late in Q4 2021 or early in Q1 2022.