Item 1.01 Entry Into a Material Definitive Agreement.
On August 20, 2021, ADESA, Inc. ("ADESA"), a subsidiary of KAR Auction
Services, Inc., a Delaware corporation (the "Company"), entered into a
Securities Purchase Agreement (the "Purchase Agreement"), by and among
(i) ADESA, (ii) Carwave Holdings LLC ("Carwave"), (iii) KKR Chevy Blocker, LLC
("SMA Blocker") and KKR NGT II (Chevy) Blocker L.P. ("NGT2 Blocker" and,
together with the SMA Blocker, the "Blockers"), (iv) KKR Chevy Aggregator L.P.
(the "Aggregator"), John Lauer, William Lauer, Joseph Lauer, Lauer Holdings
Inc., KKR-Milton Strategic Partners L.P., KKR DAF Private Assets Fund Designated
Activity Company and KKR NGT II (Chevy) Blocker Parent L.P. (collectively, the
"Sellers") and (v) the Aggregator, in its capacity as seller representative.
Pursuant to the terms and conditions of the Purchase Agreement, ADESA will
purchase from the Sellers all of the equity interests of Carwave and the
Blockers (the "Transaction").
The aggregate cash consideration payable by ADESA in connection with the
Transaction is $450 million, subject to certain adjustments pursuant to the
Purchase Agreement. The Transaction and the Purchase Agreement have been
unanimously approved by the Board of Directors of the Company.
Consummation of the Transaction is subject to customary conditions, including
the expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). Under certain circumstances, upon the termination of the Purchase
Agreement relating to the failure of ADESA to perform certain covenants, ADESA
would be required to pay a termination fee of $22.5 million to the Sellers on
the terms and conditions further set forth in the Purchase Agreement.
The Purchase Agreement also contains customary representations and warranties
and covenants, including, among other things, covenants with respect to the
operation of the business of Carwave and its subsidiaries between the signing of
the Purchase Agreement and the closing of the Transaction. In connection with
the entry into of the Purchase Agreement, ADESA has obtained a customary
representations and warranties insurance policy as recourse for certain losses
arising out of breaches of the representations and warranties of the Sellers,
the Blockers and Carwave and its subsidiaries in the Purchase Agreement.
The foregoing description of the Transaction does not purport to be complete and
is qualified in its entirety by reference to the complete text of the Purchase
Agreement, a copy of which is attached hereto as Exhibit 2.1 and incorporated
herein by reference.
Item 8.01. Other Events.
On August 23, 2021, the Company issued a press release (the "Press Release")
announcing the execution of the Purchase Agreement. A copy of the Press Release
is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Certain statements contained in this report include "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
which are subject to certain risks, trends and uncertainties. In particular,
statements made that are not historical facts may be forward-looking statements.
Words such as "should," "may," "will," "anticipates," "expects," "intends,"
"plans," "believes," "seeks," "estimates," and similar expressions identify
forward-looking statements. Such statements are based on management's current
expectations, are not guarantees of future performance and are subject to risks
and uncertainties that could cause actual results to differ materially from the
results projected, expressed or implied by these forward-looking statements.
Factors that could cause or contribute to such differences include those
uncertainties regarding the impact of the COVID-19 virus on our business and the
economy generally, and those other matters disclosed in the Company's Securities
and Exchange Commission filings. The Company does not undertake any obligation
to update any forward-looking statements.
Item 9.01 Financial Statements and Exhibits.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
2.1 Securities Purchase Agreement, by and among ADESA, Inc., Carwave
Holdings LLC, KKR Chevy Aggregator L.P., John Lauer, William Lauer,
Joseph Lauer, Lauer Holdings Inc., KKR Chevy Blocker, LLC, KKR-Milton
Strategic Partners L.P., KKR DAF Private Assets Fund Designated
Activity Company, KKR NGT II (Chevy) Blocker L.P. and KKR NGT II
(Chevy) Blocker Parent L.P.*
99.1 Press Release dated August 23, 2021.
104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document.
* Certain exhibits and schedules to the Securities Purchase Agreement have been
omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby
undertakes to provide to the Securities and Exchange Commission copies of such
documents upon request; provided, however, that the Company reserves the right
to request confidential treatment for portions of any such documents.
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