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
-
Norfolk or Norway? Holidays you can afford with different-sized pension potsMany people look forward to taking more holidays when they retire. But what sort of trips could your pension buy you? We look at the holidays to match different retirement incomes
-
Q&A: Issac Thong – new lead manager of Aberdeen Asian Income Fund
-
Camellia: an unusual tea producer that rewards patient investorsCamellia is shedding its eclectically diverse portfolio of assets to concentrate on its strengths. For investors, it's a rare opportunity
-
How to approach active ETFsActive ETFs have several advantages over other forms of open-ended investment vehicles, says David Prosser
-
8 of the best houses for sale with dining terracesThe best houses for sale with dining terraces – from an Arts & Crafts property in Great Missenden, Buckinghamshire, to a duplex apartment in a garden square in Kensington with a decked roof terrace
-
Fifty years of investment fiascos – a few examples to learn fromA benign market backdrop over the past 50 years has not prevented recurrent routs, says Max King
-
US stocks are more expensive than ever after Trump's tariffsWe don’t need to second-guess the effect of Trump's tariffs to think that the rest of the world offers better value
-
How to use SAYE and SIP schemes to multiply your moneyEmployers’ savings or share-incentive plans like SAYE and SIP schemes can help top up your pension
-
AJ Bell: a fine British fintech going cheapOpinion Don’t overlook investment platform AJ Bell, a significantly undervalued British business with an excellent financial base
-
Investors remain calm as the Middle East war unfoldsConflict in the Middle East has failed to shake oil or stock markets. Can the peace hold?
