Online used-car sales platform Shift is reportedly in merger talks with Insurance Acquisition, a so-called “blank-check company” whose purpose is to acquire and raise money for up-and-coming enterprises.
Blank-check companies are publicly traded firms that have no established business plan, but are instead set up by investors as vehicles for mergers and acquisitions.
The potential deal would take Shift public at a value of $500 million, Bloomberg reported. The transaction will be announced within a month, according to unnamed sources.
Shift, founded in 2013, allows customers to buy or sell cars online. It offers home delivery and guarantees that all its inventory has passed a 150-point inspection.
The merger comes on the heels of the successful IPO of Shift’s competitor, Vroom. Unlike competitors such as Vroom and Carvana, which both boast nationwide service, Shift currently serves only a few major markets in California as well as Portland, Ore.
To date, Shift has raised $293 million in funding. Its investors include BMW, G2VP, Goldman Sachs and venture capital firm DCM.
When it closed its last funding round, which brought in $40 million in equity, Shift co-CEO Toby Russell said he was hoping for an IPO by 2021.
But the pandemic has cast online car retail in a new light. Carvana, the largest digital-only car retailer, has seen share prices rise more than 400% since a pandemic low of $29.35.
Vroom, meanwhile, was one of only a few companies to attempt an IPO during the pandemic. The risk paid off — the IPO raised $468 million, 31% above the company’s target.