Auto Experience, Inc. Proposes To Acquire Auto Finance Firm Consumer Portfolio Services For $135 Million In Cash

Rhea-AI Summary

Auto Experience has proposed to acquire Consumer Portfolio Services (CPSS) in an all-cash deal valued at $135 million. This acquisition aims to enhance CPSS’s operations using advanced technology and digital capabilities. The proposal is set at $6.18 per share, nearly doubling CPSS’s closing price of $3.35 on October 7, 2020. Auto Experience's CEO, Samuel M. Ellis, believes that this transaction presents substantial growth opportunities for CPSS and its shareholders, leveraging Auto Experience's experience in automobile financing.

Positive

• Proposed acquisition price of $6.18 per share is nearly double the market price.
• Expected operational enhancements and value addition through technology and leadership.
• Strategic expansion with access to over 8,000 dealerships across the U.S.

Negative

• None.

DALLAS, Oct. 8, 2020 /PRNewswire/ -- Auto Experience, Inc., created in 2018 to pursue strategic business opportunities in the automobile financing market, today announced it has informed the board of directors of Consumer Portfolio Services, Inc. (Nasdaq: CPSS) of its interest in acquiring the company in an all-cash transaction valued at $135 million.  An acquisition at that price would nearly double the current value of the Nasdaq-listed company.

Based in Irvine, Calif., Consumer Portfolio Services (CPS) is an independent specialty finance company that provides indirect automobile financing to consumers.  In an October 7, 2020 letter to the company formally conveying an "indication of interest," Auto Experience said it proposes to acquire CPS for approximately $6.18 per share of common stock.  CPS shares closed at $3.35 on October 7, 2020.

In its letter to CPS, Auto Experience said it would add value to the company and its shareholders by re-engineering aspects of CPS's operations, applying proprietary technology and enhanced digital capabilities as the market increasingly shifts online, and employing a combination of existing resources and new leadership steeped in automobile financing and digital commerce.

"Acquiring Consumer Portfolio Services and leveraging our strategic and operational experience in auto financing and enterprise technology will create a strong national player that already has a toe-hold in more than 8,000 automobile dealerships across the U.S.," said Samuel M. Ellis, president and chief executive officer of Auto Experience.  "CPS is significantly undervalued based on a range of performance measures and upside growth opportunities, and we believe our proposed acquisition would be materially beneficial to shareholders and, over the longer run, to consumers and dealers."

Mr. Ellis brings deep entrepreneurial and operating experience in automobile financing and digital commerce to this opportunity.  In addition to his leadership of Auto Experience, which is focused on the strategic application of technology and digital innovation in the auto financing market, Mr. Ellis was previously the founder and CEO of Dallas-based DriverUp, an online marketplace focused exclusively on automobile finance.  Earlier, he was founder and CEO of Exeter Finance Corp., also based in Dallas.  For nearly a decade, Mr. Ellis served as senior vice president of risk management for GM Financial/AmeriCredit, the financial arm of General Motors Corp.

The business of Consumer Portfolio Services is based on purchasing retail installment contracts from franchised automobile dealerships, funding contract purchases primarily through the securitization markets and servicing the contracts over their lives.  CPS began operations in 1991 and has purchased nearly $17 billion in contracts from its inception through the first half of 2020.  At mid-year, it reported actively servicing a contract portfolio of approximately $2.3 billion and 173,000 customers.  CPS's full-year 2019 revenue was $346 million with net income of $5.4 million.

In its letter to the company, Auto Experience asked for a response from the CPS Board by October 30, 2020.

About Auto Experience

Auto Experience is focused on strategic acquisitions that will advance the development of mainstream, online auto financing transactions and other consumer services in the automotive vertical. The company targets strategic opportunities that can transform good organizations into great ones through re-engineering of technology, operations and capitalization.  Auto Experience is focused on opportunities that have teams and stakeholders inspired and committed to improve the consumer experience in all areas of the retail automotive space.  Visit our website at www.autoexperience.info.

Media Contact:
Tracy Rubin
JCUTLER media group
tracy@jcmg.com

 

View original content:http://www.prnewswire.com/news-releases/auto-experience-inc-proposes-to-acquire-auto-finance-firm-consumer-portfolio-services-for-135-million-in-cash-301148416.html

SOURCE Auto Experience, Inc.

FAQ

What is the value of the acquisition proposed for Consumer Portfolio Services by Auto Experience?

The proposed acquisition value is $135 million.

What is the proposed price per share for CPSS in the acquisition?

The proposed price per share is $6.18.

When did Auto Experience express its interest in acquiring CPSS?

Auto Experience formally expressed its interest on October 7, 2020.

What advantages does Auto Experience claim it can bring to CPSS?

Auto Experience claims it can enhance CPSS's operations with proprietary technology and digital capabilities.

What is the deadline for the CPS Board to respond to Auto Experience's proposal?

The CPS Board is requested to respond by October 30, 2020.