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Auto Experience Makes Offer to CPS

By Staff Writer October 09, 2020

Auto Experience Inc., created in 2018 to pursue strategic business opportunities in the automobile financing market, has informed the board of directors of Consumer Portfolio Services (CPS) an interest in acquiring the company in an all-cash transaction valued at $135 million. An acquisition at that price would nearly double the current value of the Nasdaq-listed company.

Based in Irvine, Calif., CPS is an independent specialty finance company that provides indirect automobile financing to consumers. In an Oct. 7 letter to the company formally conveying an “indication of interest,” Auto Experience proposes to acquire CPS for approximately $6.18 per share of common stock. CPS shares closed at $3.35 on Oct. 7.
“Acquiring Consumer Portfolio Services and leveraging our strategic and operational experience in auto financing and enterprise technology will create a strong national player that already has a toe-hold in more than 8,000 automobile dealerships across the U.S.,” said Samuel M. Ellis, president and chief executive officer of Auto Experience. “CPS is significantly undervalued based on a range of performance measures and upside growth opportunities, and we believe our proposed acquisition would be materially beneficial to shareholders and, over the longer run, to consumers and dealers.”

The business of Consumer Portfolio Services is based on purchasing retail installment contracts from franchised automobile dealerships, funding contract purchases primarily through the securitization markets and servicing the contracts over their lives. CPS began operations in 1991 and has purchased nearly $17 billion in contracts from its inception through the first half of 2020. At mid-year, it reported actively servicing a contract portfolio of approximately $2.3 billion and 173,000 customers. CPS’s full-year 2019 revenue was $346 million with net income of $5.4 million.

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Last modified on Friday, 09 October 2020 13:12

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