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KAR Auction Services makes $30M acquisition

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Carmel-based KAR Auction Services Inc. has acquired a 50-percent stake in Toronto-based Nth Gen Software Inc. for about $30 million in cash, the companies announced Wednesday.

KAR, which released a solid quarterly earnings report on Tuesday, made the acquisition through its ADESA business unit, which operates 65 auto-auction locations across North America.

The acquisition gives ADESA ownership in Nth Gen Software’s top product, TradeRev, an online automotive remarketing system that lets dealers launch and participate in real-time vehicle auctions from their mobile devices or desktop computers.

In addition to the acquisition, ADESA entered into a joint marketing agreement with TradeRev that will expand its presence in the dealer-to-dealer online space in the U.S. and Canadian markets. ADESA also becomes the exclusive provider of certain TradeRev products and services.

“TradeRev allows dealers to obtain instant bids while the retail customer is sitting in the showroom by providing a private, customized network for buyers and sellers that quickly and efficiently moves fresh trades,” ADESA CEO Stephane St-Hilaire said in a prepared statement. “We acknowledge that dealers are using technology more and more to buy and sell cars. In that regard, TradeRev is a natural evolution in the dealer-to-dealer space, which includes approximately 20 million to 22 million transactions a year.”

Founded in 2009, TradeRev operates throughout Canada and in some U.S. states.

“Partnering with ADESA will allow us to share our innovative TradeRev technology with even more customers across North America,” TradeRev founder Mark Endras said in a prepared statement.

KAR on Tuesday reported a 52-percent jump in profit and an 8-percent rise in revenue for the second quarter ended June 30.

Profit rose to $50.8 million, or 36 cents per share, compared with $33.4 million, or 24 cents per share, in the same quarter a year ago.

Revenue was $585.6 million, up from $541.4 million last year. The revenue figure topped analyst expectations of $577.7 million.

Adjusted earnings for the second quarter rose to $60.2 million, or 42 cents per share, from $47.2 million, 34 cents, in the year-ago period. Analysts expected KAR to earn 38 cents per share.

The company announced a cash dividend of 25 cents per share on its common stock, payable Oct. 2 to shareholders of record as of Sept. 24.

KAR said it continues to expect earnings in the range of 95 cents to $1.05 per share and adjusted earnings in the range of $1.35 to $1.45 per share during fiscal 2014.

KAR shares rose 1.8 percent, or 53 cents, Wednesday morning, to $29.76 each.
 

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