British online car retailer Cazoo will make its stockmarket debut in New York after it agreed to merge with special-purpose acquisition company (SPAC) Ajax I in a deal that values the company at $7bn, says Kalyeena Makortoff in The Guardian. The deal is a “blow” to the City and the London Stock Exchange, which reportedly “lobbied for the car retailer to list in its home market”. This also represents another victory for SPACs, which offer a “cheaper, quicker way for a private company to join a stockmarket”.
The agreement will provide Cazoo, known as the “Amazon of used cars” with up to $1.6bn in funding, to “fuel its growth and expand its operations across Europe”. The deal is particularly good news for the Daily Mail and General Trust, says The Times. Its 20% stake in the company is worth around £1bn – “significantly more” than the £117m the Daily Mail originally invested. No wonder Daily Mail shares jumped by 9% on the news. The listing is expected to conclude by the third quarter of this year, but by then it could seem a bargain, says Tim Bradshaw in the Financial Times. Cazoo believes that Europe’s $500bn used car market is “ripe for disruption”, with customers becoming “more comfortable spending sums as [high] as its average selling price of £12,453 online”.
Meanwhile, the greater population density compared with America could enable it to make earnings before interest, taxes, depreciation and amortisation margins of 8%-10% in the long term. Note that SoftBank-backed rival Auto1 is already a third above its initial public offering price after it went public in Frankfurt in early February to raise around €1.8bn.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
8 of the best energy-efficient properties for saleThe best energy-efficient properties for sale – from a HUF HAUS in London’s Dulwich Village to a contemporary property in the Lake District National Park
-
Revealed: the new £1 million UK postcodesWe look at some of the priciest parts of the UK, where properties are selling for £1 million or more
-
Find tomorrow’s Asian giants while they are still smaller companiesOpinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
-
AI will maintain Moody’s market lead, says Stephen ConnollyOpinion Veteran data provider Moody's has adapted well to the modern world, and is one of Warren Buffett’s longest-held investments
-
Is BlackRock World Mining gearing for a recovery?Opinion After a frustrating year, BlackRock World Mining is positioned for growth and to capitalise on the sector's recovery
-
Should you limit exposure to US tech stocks?An end to the AI boom would shake both US funds and global trackers. Here’s one way to trim exposure to US tech stocks
-
The mystery of America’s gold and why an audit mattersHow much gold does the US actually have? Dominic Frisby explains why it matters
-
Art vs AI: artists’ uprising takes on the botsAI performs impressively, but it’s all based on human work that was taken without payment. The government thinks this is fine. Copyright holders beg to differ
-
The benefits of a stock bubbleOpinion We tend to think of stock bubbles as bad things but, as the dotcom craze shows, good things can come from them, says Matthew Lynn
-
Why CEOs deserve a pay riseOpinion The CEOs of big companies often come under fire for being grossly overpaid. But the truth, as per some economists, is the opposite. Do they merit a pay rise?
