ACV Auctions made a name for itself by moving used-car auctions online. Now the company is weighing a sale of its own after receiving takeover offers, a vote of confidence in a business that has had a rough year on the stock market.
The Buffalo, New York business has hired financial advisers to review its options. A strategic partnership is also under consideration as an alternative to selling outright.
People with knowledge of the matter, who asked not to be named, said any deal is not happening soon. ACV could also choose to stay independent, and it declined to comment.
Getting advisers involved is a standard step when a company gets takeover interest. It means the offers were serious enough to take a look at, even if nothing comes of it.
ACV runs wholesale used-car auctions for dealerships, which is a fancy way of saying dealers buy and sell vehicles to each other through its platform. The company also offers financing and transportation, and its website reports performing over a million vehicle inspections annually.
That scale is part of what makes ACV attractive. A network of dealers that size does not build itself overnight.
The sale talk comes after a rough stretch for ACV's stock, which has fallen 47% over the past year. Its latest earnings report showed revenue up 10% from a year earlier, but shares still fell in late Monday trading.
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Tuesday was a day of whiplash. The stock jumped as much as 13% to $8.20 at the opening bell, then dropped to $6.70, down 7.7% from the prior close.
By 2:00 p.m. it had climbed back to $7.72, and it closed at $7.26, unchanged for the day. Since the prior close was also $7.26, the stock ended Tuesday right where it started.
With that closing price, ACV's market capitalization stands at $1.2 billion, the figure any acquirer would need to surpass.
ACV is not the only automotive business thinking about a sale. CCC Intelligent Solutions, which makes software for processing auto insurance claims and repairs, is also considering one, according to a report last month.
The pressure there comes from Elliott Investment Management, an activist investor that pushes companies to make changes. Activist investors buy stakes in companies and then press for moves they think will lift the stock, sometimes including a sale.
ACV's process started with takeover offers, while CCC's started with investor pressure. Both companies are now reviewing their options, which is a useful reminder that sale talks can start from different places.
For investors, the big picture is that ACV is now "in play," which is Wall Street shorthand for a company that might be bought. That can push a stock around on headlines alone, and Tuesday's swing showed exactly how fast that happens.
That gap between what the market thinks and what a buyer might pay is the whole game in takeover situations. Whether you own ACV or are just watching, nothing is decided yet.
For shareholders, that means the stock could keep swinging as news comes and goes.
The bigger lesson for your portfolio is that takeover news cuts both ways. It can lift a beaten-down stock, but it can also end with no deal at all, leaving the stock to drift back down.
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