Shift Technologies and Insurance Acquisition Corp. announce merger
Insurance Acquisition Corp., a public company and a subsidiary of Cohen & Company Inc, which was formed for the main purpose of acquiring or merging with insurance companies, is announcing a definitive agreement to merge with Shift Technologies, an online marketplace for buying and selling used cars.
Founded in 2013, Shift has raised $293 million, mostly in equity financing, from a range of well-known firms such as Goldman Sachs, Fenway Summer Ventures, and BMW i Ventures. Based on LinkedIn data, the company’s total headcount is around 230 – down 15% from June 2019 when it employed ~270 individuals.
Insurance Acquisition Corp. will combine with Shift for aggregate consideration of approximately $380 million in Insurance Acquisition Corp. Class A common stock, plus an additional 6 million shares of Class A common stock that will be earned if the combined company achieves certain price targets over time. In connection with the transaction, institutional investors, including Fidelity Management & Research Company, LLC, and ArrowMark Partners, have committed to a $185 million private purchase of Insurance Acquisition Corp. Class A common stock that will close concurrently with the business combination. Insurance Acquisition Corp. has committed to register these private shares shortly following the closing of the combination. The combined company will retain up to $300 million of cash following the transaction, which will be used to support working capital and fund growth.
In connection with the closing of the transaction, Insurance Acquisition Corp. intends to change its name to Shift Technologies, Inc. and remain NASDAQ-listed under a new ticker symbol. The transaction is expected to close in the third quarter of 2020.
“We are excited to partner with Shift and its world-class management team as it leverages its technology platform to disrupt the $840+ billion used car market. With its tremendous, ongoing success in its core markets, we believe that this merger and its accompanying capital infusion will enable Shift to expand its product offerings and execute on its growth strategies.” – Daniel Cohen, Chairman of the Board of Directors of Insurance Acquisition Corp.
“Shift’s mission is to make car purchase and ownership simple. Merging with Insurance Acquisition Corp. is the next step in our evolution and will enhance our ability to scale our operations as we continue to deliver one of the industry’s broadest selections of used cars via our powerful technology platform. We look forward to partnering in a transaction that provides an efficient path for a successful transformation to a public company.” – George Arison, Shift Co-CEO.
“Our high net promoter score demonstrates our success in delivering a simple, satisfying car buying experience for consumers, and our strong market penetration in our core markets demonstrates our ability to effectively scale the business. We operate in a massive market and we believe that there is a significant opportunity to continue to rapidly grow our business. We are actively pursuing our growth initiatives as we execute on our vision.” – Toby Russell, Shift Co-CEO.