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British Car Startup Cazoo to Go Public Via $7 Billion SPAC Deal

British startup Cazoo is set to list on the New York Stock Exchange, capitalizing on a pandemic-era shift to online car buying.

British online car retailer Cazoo on Monday said it would list on the New York Stock Exchange following a merger with New York-listed special purpose acquisition company (SPAC) Ajax in a deal that values Cazoo at $7 billion.

After the merger with Ajax, which was founded by billionaire investor Dan Och, Cazoo will continue to be led by founder and chief executive Alex Chesterman, the company said. Och will join the board at Cazoo.

Founded in 2018, Cazoo's private funding round in September valued the company at $2.6 billion.

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The transaction is expected to close in the third quarter of 2021, subject to regulatory clearance and approval from shareholders of both Cazoo and Ajax. The board at Cazoo has unanimously approved the deal.

Upon closing of the transaction, Cazoo will be listed on New York Stock Exchange under the ticker symbol CZOO.

"This announcement is another major milestone in our continued drive to transform the way people buy cars across Europe," said Chesterman in a statement.

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"This deal will provide us with almost $1 billion of further funds to fuel our growth and I am delighted to be partnering with Dan and his team at Ajax to rapidly expand and deliver the best car buying experience to consumers across Europe," Chesterman added.

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The merger gives Cazoo up to $1.6 billion in funding, which the company said it will spend on expanding further in France and Germany, as well as on moving into Italy and Spain.

Terms of the deal call for up to $805 million in cash from Ajax, and an $800 million fully committed private investment in public equity (PIPE) at $10 per share led by the AJAX sponsors and D1 Capital Partners.

Daily Mail & General Trust, which owns a 20% stake in Cazoo, will receive about $1.35 billion of the proceeds.

Other new and existing investors include Altimeter, funds & accounts managed by BlackRock, Counterpoint Global and Fidelity Management and Research Company, Marcho Partners, Mubadala Capital, Pelham Capital, Senator Investment Group and Spruce House Partnership.

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"With their constant focus on innovation, data and customer satisfaction, I have no doubt that Cazoo is going to continue to lead the way in this massive, untapped market opportunity and am looking forward to joining the Board of Cazoo and working with Alex and his team," said Och in a statement.