After entering into a definitive agreement to acquire powersports dealer RideNow Powersports in March, RumbleOn (NASDAQ: RMBL) is expected to finalize the deal today.
The Arizona-based retailer combines its business with the Irving-based, publicly traded used vehicle e-commerce platform in a cash and stock deal valued at more than $575 million. When the deal was announced, the combined entity expected revenue between $1.45 billion to $1.55 billion had the transaction taken place on January 1.
“We are creating the only omnichannel solution in the powersports industry,” said Marshall Chesrown, RumbleOn’s CEO, in a statement at the time the deal was announced. “RideNow’s significant physical retail platform provides the missing piece of a ‘bricks and clicks’ strategy for RumbleOn, enabling us to reach consumers wherever they want to shop, whether online, offline, or both.”
As of market opening today, RumbleOn shares traded at $35.24 per share, down from $35.37 per share at market close yesterday.
RumbleOn said the move would help consolidate the consumer powersport market while helping it improve monetization on its buying and selling platform. Long term, the company expects the deal to produce revenue of more than $5 billion and an adjusted EBITDA margin of more than 10%. As part of the deal, which will see RideNow operate under the RumbleOn brand, RideNow Co-founders Mark Tkach, CEO, and William Coulter will join RumbleOn’s board of directors. Senior management of both companies has entered into three-year executive employment agreements.
“For us, this transaction is about unlocking incremental sales, capturing additional monetization opportunities such as parts and services, and consolidating a fragmented industry to drive efficiency and improve the customer experience,” Chesrown said. “For our customers, this is about offering the most robust selection of inventory through a simple, safe, hassle-free and flexible experience nationwide.”
Since RideNow was formed in 1983, the company has grown to operate more than 40 retail locations in 11 states. Last year, the company sold more than 45,500 vehicles and posted close to $900 million in total revenue. Since last year, the company has been working with RumbleOn when it began placing inventory on RumbleOn’s platform.
RumbleOn was launched in 2017. The company’s revenue fell to around $416 million last year due to the pandemic and damage to a Nashville operating facility. In 2019, the company posted revenue of more than $840 million. In Q2 of this year, the company saw revenue of $168.3 million, up from $84.3 million at the same time last year.
The RideNow acquisitions also come amid leadership changes at RumbleOn. In early June, the company announced its Co-founder, CFO and Board Member Steven Berrard passed away. That same month, it announced that its outside legal team Michael Francis was joining the company full-time as its general counsel. RumbleOn followed that announcement by bringing on Matthew McCartin as its new chief marketing officer this month. Before that, McCartin serves as the president and CMO of e-commerce and digital at Vitalize, an Expedia Ventures company.
RumbleOn has nearly made an acquisition each year since its launch. In 2017, it acquired NextGen Dealer Solutions’ sales platform CyclePro in a $4.75 million asset purchase. In 2018, it acquired Charlotte’s Wholesale, LLC and Wholesale Express, LLC in a $21.6 million cash and stock deal. And in 2019, it acquired vehicle distributor AutoSport-USA $3.47 million deal.
“From adding financing options with RumbleOn Finance to exploring the opportunity to open pre-owned retail stores, RumbleOn’s technology and e-commerce presence will provide us access to a nationwide audience and high demand pre-owned inventory,” Tkach said in a statement in March. “Combining the proprietary technology platform, online aggregation and distribution, nationwide logistics network and the scale and physical footprint of these two companies will give more powersport enthusiasts across the country access to our robust inventory.”
