KAR Auction Services, Inc. will spin off its Insurance Auto Auctions (IAA) salvage auction business unit as a publicly traded company to give its leaders greater independence, according to a company announcement.
Jim Hallet will remain CEO and chairman of the board of directors for KAR. John Kett will continue to serve as IAA president and CEO. The separation is expected to close within the next 12 months.
“IAA has been a meaningful part of the KAR platform for over 10 years, despite limited operational overlap between IAA and KAR’s core whole car operations,” said Jim Hallet, chairman and CEO of KAR Auction Services. “The proposed separation will give KAR and IAA the flexibility to advance unique strategic priorities and make independent decisions on investments, acquisitions and capital expenditures. In turn, this will help both companies focus investments and innovation on serving their customers and strengthen their respective competitive positioning in the global marketplace.”
After the separation, KAR will primarily focus on its whole car auction marketplaces and technology solutions serving OEMs, captive financing companies, vehicle lending institutions, fleets, and franchise and independent car dealers, according to the company. IAA will focus on the salvage vehicle market, serving insurance carrier sellers, dealers, vehicle and parts recyclers, and metal scrapping companies.
IAA will retain all of its North American salvage vehicle operations and the HBC Vehicle Services business in the U.K. All other KAR businesses will remain part of KAR Auction Services, Inc., according to the company.