Insurance Acquisition Corp., a subsidiary of Cohen & Company Inc., has entered into a definitive merger agreement with automotive e-commerce firm, Shift Technologies Inc.
In relation to the closing of the transaction, which is expected to occur in the third-quarter of 2020, Insurance Acquisition Corp. plans to change its name to Shift Technologies, Inc. and remain NASDAQ listed under a new ticker symbol.
As we wrote at the time, the special purpose acquisition company completed its initial public offering (IPO) in late March 2019, raising more than $150 million.
Shift’s mission is to make purchasing a car convenient, fair, and accessible for everyone. The company is powered by a unique piece of technology that delivers a comprehensive and seamless car ownership experience.
Under the terms of the merger agreement, Insurance Acquisition Corp. will combine with Shift for aggregate consideration of roughly $380 million in Insurance Acquisition Corp. Class A common stock, plus an additional six million shares of Class A common stock that will be earned if the combined firm achieves certain price targets over time.
In relation to the arrangement, institutional investors, including Fidelity Management & Research Company, LLC, and ArrowMark Partners, have committed to a $185 million private purchase of Insurance Acquisition Corp. Class A common stock that will close at the same time as the business merger. Furthermore, Insurance Acquisition Corp. has committed to register these private shares shortly after the closing of the deal.
Following the transaction, the combined company is set to retain up to $300 million of cash, which will be used to support working capital and fund growth.
Daniel Cohen, Chairman of the Board of Directors of Insurance Acquisition Corp., commented: “We are excited to partner with Shift and its world-class management team as it leverages its technology platform to disrupt the $840+ billion used car market. With its tremendous, ongoing success in its core markets, we believe that this merger and its accompanying capital infusion will enable Shift to expand its product offerings and execute on its growth strategies.”
George Arison, Shift Co-Chief Executive Officer (CEO), said: “Shift’s mission is to make car purchase and ownership simple. Merging with Insurance Acquisition Corp. is the next step in our evolution and will enhance our ability to scale our operations as we continue to deliver one of the industry’s broadest selections of used cars via our powerful technology platform. We look forward to partnering in a transaction that provides an efficient path for a successful transformation to a public company.”
Following the close of the deal, Shift’s experienced management team will continue to operate the combined company.
According to an announcement on the merger agreement, the pro forma implied market capitalisation of the combined company is roughly $730 million.
Toby Russell, Shift Co-CEO, added: “Our high net promoter score demonstrates our success in delivering a simple, satisfying car buying experience for consumers, and our strong market penetration in our core markets demonstrates our ability to effectively scale the business. We operate in a massive market and we believe that there is a significant opportunity to continue to rapidly grow our business. We are actively pursuing our growth initiatives as we execute on our vision.”
Through its platform, Shift enables the discovery, test drive, purchase and financing of used vehicles to consumers without visiting a physical place of business. By utilising its five regional reconditioning centres and efficient purchase offering, Shift can address the full spectrum of used cars, regardless of sales price.
The Boards of Directors of both companies have unanimously approved the transaction.