LONDON: DMGT currently owns a c.20% stake in Cazoo, the UK’s leading online car retailer with a fast-growing presence in Europe, through its venture capital arm, dmg ventures.
DMGT notes the announcement by Cazoo of a definitive business combination agreement with AJAX I (‘AJAX’), a publicly-traded special purpose acquisition company (‘SPAC’) listed on the New York Stock Exchange (‘NYSE’).
Upon closing of the proposed transaction, the combined company will be named Cazoo and be listed on the NYSE under the new ticker symbol ‘CZOO’.
The transaction values the combined company at a pro forma enterprise value of approximately US$7.0 billion and a pro forma equity value of approximately US$8.1 billion. The transaction includes up to US$805m AJAX cash in trust, assuming no redemptions by AJAX shareholders, and an US$800m fully committed private investment in public equity (‘PIPE’) at US$10.00 per share, led by the AJAX sponsors and D1 Capital Partners, and including new and existing investors.
If the proposed transaction closes, and assuming no redemptions by AJAX shareholders, the combined value in cash proceeds and shares in the listed Cazoo, valued at the US$10.00 per share issue price, that DMGT will receive on closing is expected to be approximately US$1.35 billion.
It is likely that DMGT will receive some cash proceeds on closing, but the amount will depend on a number of factors, including redemptions by AJAX shareholders, if any, as well as DMGT’s election and those of other shareholders with respect to receipt of cash consideration¹. Lock-up restrictions are expected to apply for five to six months after the transaction closes.
The transaction is expected to support Cazoo’s mission to continue to transform the car-buying experience across Europe, with the proceeds funding the further build-out of its brand and infrastructure. Cazoo is well positioned to take advantage of the shift to online car-buying and disrupt the highly fragmented c.US$700 billion European used car market.
The transaction requires the approval of the shareholders of AJAX and Cazoo and is subject to other customary closing conditions, including the receipt of certain regulatory approvals. The transaction is expected to close in the third quarter of calendar year 2021. Additional information about the proposed transaction will be provided in a Current Report on Form 8-K to be filed by AJAX with the Securities and Exchange Commission (‘SEC’) and will be available on Cazoo’s website at www.cazoo.co.uk/investors and at www.sec.gov.
Paul Zwillenberg, CEO of DMGT, said: “This is another great example of DMGT’s ability to identify and support disruptive early-stage businesses led by entrepreneurial management teams. Our strategy gave us confidence in our portfolio and the financial flexibility to invest in Cazoo, including leading a funding round in March 2020 at a time of global uncertainty. We are delighted by the rapid progress the business has made and the capital appreciation on our £117m investment.”
Cazoo’s mission is to transform the car-buying experience for consumers across Europe by providing better selection, quality, transparency, convenience and peace of mind. Cazoo aims to make buying a car no different to any other product online today, where consumers can simply and seamlessly purchase, finance or subscribe to a car entirely online for either delivery or collection in as little as 72 hours.
Cazoo was founded in 2018 by serial entrepreneur Alex Chesterman OBE, has a highly experienced management team and is backed by some of the leading global technology investors. (www.cazoo.co.uk)