Subprime auto lender rejects Dallas firm’s unsolicited $ 135 million takeover offer
A risky California auto lender rejects a Dallas-based company’s $ 135 million takeover offer, saying it “grossly understates” the company.
Consumer Portfolio Services Inc. said on Wednesday that its board of directors unanimously rejected the unsolicited offer from Auto Experience Inc., led by Samuel Ellis, who previously founded auto lender Exeter Finance and the market. DriverUp online car financing.
“Given the long-term prospects of the company, the board of directors has determined that the continuation of such a transaction would not be in the best interests of the shareholders of the company,” Consumer Portfolio Services said in a statement. “In addition, the CPS Board of Directors does not believe that [Auto Experience’s] the indication of interest is credible.
A Los Angeles communications company representing Auto Experience did not immediately respond to the rejection. Ellis said in early October that his cash offer was $ 6.18 per share – an 84% premium over where the shares of the Nasdaq-listed company were trading at the time.
Consumer Portfolio’s share price climbed 40% to $ 4.69 on the day Auto Experience’s takeover offer went public. The shares closed at $ 3.95 on Wednesday.
The Irvine, Calif.-Based company said earlier that Auto Experience called its offer all-cash because it included unspecified conditions and contingencies. He also said his only previous contact with Ellis was a “three-page May letter … delivered to the company’s CFO and rejected at that time.”
CPS works with car dealerships to purchase and manage consumer loans, financing its purchases primarily through securitization markets. About 75% of its business finances the sale of used cars, and its customers often have limited credit histories or past credit problems. Texas is one of its biggest markets.
The 834-employee company posted revenue of $ 346 million last year, with a profit of $ 5.4 million.