British online car retailer Cazoo will make its stock market debut in New York though a special-purpose acquisition company (Spac), after agreeing to a merger deal that values the company at $7bn (£5bn).
Cazoo is set to merge with Ajax I, led by the billionaire US investor Dan Och, making it the latest company to take advantage of a growing Spac trend.
Spacs are “blank cheque” companies that have become an increasingly popular way for companies to list and offer a cheaper, quicker way for a private company to join a stock market.
However, the news is a blow to the City and London Stock Exchange, which reportedly lobbied for the car retailer to list in its home market. The government is racing to update UK listing rules to help make London a more attractive place for startups and high-growth companies to list.
The deal is expected to provide Cazoo with up to $1.6bn in funding to fuel its growth and expand its operations across Europe. Cazoo – which employs over 1,800 people across the UK, Germany France and Portugal – said it is expecting to report revenues of up to $1bn for 2021, a 300% jump compared with a year earlier.
Cazoo was founded in 2018 by its chief executive, Alex Chesterman, who will bring Och on to the board as part of the merger deal.
The company has been described as the Amazon of the used car market. Cazoo buys and inspects all cars before they are listed online, and aims to deliver or collect vehicles in as little as 72 hours.
“This announcement is another major milestone in our continued drive to transform the way people buy cars across Europe,” Chesterman said. “We have created the most comprehensive and fully integrated offering in the largest retail sector which currently has very low digital penetration.”
The deal will also deliver a $1.35bn windfall for Daily Mail owner DMGT, which is a shareholder in Cazoo. The media group originally invested bout £117m in the business.
DMGT’s share price rose 10.7% to 947p at the start of trading on Monday.