Auto retailing veteran and entrepreneur Franklin McLarty’s special-purpose acquisition company is branching into automotive finance and insurance.
Vehicle protection plans provider Olive.com and its affiliate PayLink Direct have agreed to go public in a deal with a MDH Acquisition Corp. that will give the combined business a valuation of about $960 million including debt.
McLarty, who has links to three prominent U.S. dealership groups, is chairman of MDH, which launched in February. The public investment company trades under the MDH.U symbol on the New York Stock Exchange. It closed an initial public offering of $276 million. At the time McLarty told Automotive News that while auto retail was a potential target for the special-purpose acquisition company, there weren’t plans to pursue traditional franchised dealerships.
The transaction with MDH values the combined business at 6.4 times estimated 2023 earnings before interest, taxes, depreciation and amortization. The deal includes $291 million in proceeds from the trust account of the special purpose acquisition company, or SPAC, plus a $15 million private investment in public equity, also known as a PIPE.
The new company will be known as Olive Ventures Holdings Inc., or Olive.com, and will be listed on the New York Stock Exchange under the symbol OLV.
“We’re coming at the market at a very differentiated position and looking for a way to broaden what we’ve been building,” said Rebecca Howard, Olive.com’s founder and CEO.
Chicago-based Olive.com sells extended vehicle warranties online to replace manufacturer guarantees once they expire. It mostly covers cars that are from six to 12 years old. Howard, who will be CEO of the combined company, said that no other companies currently provide these plans entirely digitally. PayLink Direct, started in 2006, provides payment plans for home as well as vehicle service contracts.
“My mission here is to focus on the consumer and focus on bringing the best-in-class vehicle products to consumers that have automobiles,” Howard said. “And do away with those pesky, infuriating robodial calls to cellphones which are really not helpful to the consumer.”
The company’s main channel of marketing is through online advertisement and hockey sponsorships. It plans to offer other add-on plans such as maintenance, tire and wheels, gas and appearance programs, she said.
Existing shareholders of PayLink Direct and Olive.com are rolling over their entire stake and are expected to own about 74 percent of the equity of the new company.
McLarty has links to RML Automotive, McLarty Automotive and Matt Bowers Auto Group, which was previously called the Southern United Auto Group.
Franklin McLarty helped found RML Automotive of Lewisville, Texas, and was CEO of the group from 2012 to 2015. Mark McLarty, Franklin McLarty’s brother, is chairman of the McLarty Automotive Group in Little Rock, Ark., and Franklin McLarty is a co-founder and minority partner of Matt Bowers Auto Group.
Jackie Charniga of Automotive News and Bloomberg contributed to this report.