Used automobile retailer CarMax announced Thursday that it has signed a definitive agreement to acquire Edmunds after acquiring a minority stake in the company in early 2020.
CarMax invested $50 million in the online car shopping guide in January 2020 giving them a minority stake in Edmunds.
The deal for CarMax to acquire full ownership of Edmunds is expected to close in June, with a “purchase price that implies an enterprise value of $404 million, inclusive of CarMax’s initial investment, which we expect to be paid in a combination of cash and stock,” the retailer said a company statement.
Based in Santa Monica, California, Edmunds is one of the most well-established and trusted online guides for automotive information and a recognized industry leader in digital car shopping innovations. The company also serves as a digital guide that aids car shoppers online from research to purchase of their vehicles.
CarMax expects the addition of Edmunds’ net income to be immaterial to the company’s earnings per share in fiscal 2022, with the potential for significant shareholder value creation over the longer term.
With this acquisition, CarMax and Edmunds are expected to accelerate their respective capabilities to deliver an enhanced digital experience to their customers by leveraging Edmunds’ compelling content and technology, CarMax’s unparalleled national scale and infrastructure, and the combined talent of both companies.
Following the closing of the transaction, Edmunds will continue to operate independently and will remain focused on delivering confidence to consumers and exceptional value to its dealer and OEM clients.
“We are excited to bring the iconic Edmunds brand, history of innovation, and exceptional technology and creative talent into the CarMax family,” CarMax President and Chief Executive Officer Bill Nash said.
“Our partnership to date has proven to be an outstanding combination as we’ve developed innovative products and advanced our shared commitment to delivering the highest quality online experience. We look forward to supporting and investing in Edmunds’ continued growth and are excited about the many opportunities ahead for both CarMax and Edmunds,” Nash stressed.
Following CarMax’s initial investment last year, both firms jointly developed a number of strategic initiatives, including a successful online instant offer for sellers of used autos.
“The instant offer products on Edmunds.com and CarMax.com have put CarMax in the position to become the largest online buyer of used autos from consumers,” Nash added.
The two companies also plan to collaborate on new initiatives leveraging Edmunds’ content and technology expertise, as well as on new products to serve Edmunds’ customers.
“For over 50 years, Edmunds has been delivering value to automotive shoppers, making the entire car buying process easier. We have found a great partner in CarMax, with whom we look forward to continuing to grow and support our shoppers, as well as our dealer and OEM partners while providing continuous innovations to the market. I am excited about the next chapter in Edmunds’ evolution,” Avi Steinlauf, Edmunds’ Chief Executive Officer said.