TrueCar, Inc., the most efficient and transparent online destination to find a car, announced today that it has entered into an agreement with J.D. Power to sell its ALG, Inc. subsidiary for $135 million. The total consideration includes an upfront cash payment of $112.5 million at closing and total deferred payments of up to $22.5 million based on certain financial results.
TrueCar also announced that its Board of Directors has authorized a share repurchase program of up to $75 million, with the intent to begin repurchasing shares in the near-term. The company intends to use available cash as well as the proceeds from the ALG divestiture to support this repurchase program, fortify its balance sheet and maintain strategic flexibility.
“Today’s announcement is a tremendous outcome both in terms of the value delivered to our shareholders and the potential ALG has with its new owner,” said Mike Darrow, President and Chief Executive Officer of TrueCar. He continued, “After careful consideration of a variety of options and potential partners, it became clear that a sale of ALG to J.D. Power, with its breadth of complementary services, represented the best possible path forward for all parties.”
TrueCar’s Chief Financial Officer, Noel Watson, added, “The successful completion of this transaction represents yet another milestone in our ongoing transformation. We continue to believe that an unwavering focus on our core business will drive a balance of sustainable growth and profitability that maximizes long-term shareholder value.”
Transaction Highlights
Total consideration of $135 million comprised of: (i) an upfront cash payment of $112.5 million at closing, (ii) up to $7.5 million payable in early 2021 based on ALG’s 2020 revenue and (iii) up to $15 million payable in 2023 based on 2022 revenue
Sale multiple of 7x LTM ALG revenue unlocks immediate value for TrueCar shareholders
Reinforces management’s focus on core business and commitment to creating shareholder value and is consistent with other steps taken towards that end
The transaction was unanimously approved by TrueCar’s Board of Directors and is expected to close by the end of 2020. The closing is subject to customary closing conditions as well as regulatory review and approval.
Goldman Sachs & Co. LLC. is serving as exclusive financial advisor to TrueCar in connection with the transaction and Cooley LLP is serving as legal counsel.
SOURCE: TrueCar