Online used-car seller Shift to go public through reverse merger

Used cars

Online used-car seller Shift Technologies has said it plans to go public later this year through a reverse merger with a blank-check company, as US capital markets rebound after the COVID-19 crisis forced companies to halt new listings.

KEY POINTS:

  • Shift Technologies says it plans to go public later this year through a reverse merger
  • The used car seller had noted rivals Vroom Inc successful listing earlier this month, with its stock price more than doubling
  • The merger will be with Insurance Acquisition Corp, a special purpose acquisition vehicle that has no operations of its own

Shift’s listing also highlights the strong appetite for new stock offerings by companies with an online-focused business against the backdrop of shelter-at-home orders and social distancing norms because of the pandemic.

Auto retailers have turned to online channels to close deals without a handshake and are arranging for vehicles to be picked up or delivered without requiring customers to visit stores.

Rival Vroom Inc listed its shares earlier this month, with its stock price more than doubling on its debut.

Shift will merge with Insurance Acquisition Corp, a special purpose acquisition vehicle (SPAC) that has no operations of its own. The SPAC will raise $185 million by selling its shares, valuing the combined company at $730 million on a pro forma basis, the companies said in a statement.

A SPAC allows a private company to go public by avoiding the trouble of filing paperwork with regulators and dealing with market jitters that could crimp investor appetite for the offering.

Via our content partners at Reuters. Reporting by Bharath Manjesh in Bengaluru. Editing by Saumyadeb Chakrabarty.

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