Subprime auto lender rejects Dallas firm’s $135 million unsolicited buyout bid - The Dallas Morning News

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A California subprime auto lender is rejecting a Dallas company’s $135 million buyout offer, contending it “grossly undervalues” the company.

Consumer Portfolio Services Inc. said Wednesday that its board of directors unanimously rejected the unsolicited bid from Auto Experience Inc., headed by Samuel Ellis, who previously founded auto lender Exeter Finance and online auto finance marketplace DriverUp.

“Taking into account the company’s long-term prospects, the board determined that pursuing such a transaction would not be in the best interests of the company’s shareholders,” Consumer Portfolio Services said in a statement. “In addition, the CPS board does not believe that [Auto Experience’s] indication of interest is credible.”

A Los Angeles communications firm representing Auto Experience didn’t immediately respond to the rejection. Ellis said in early October that his all-cash offer amounted to $6.18 a share — an 84% premium over where the Nasdaq-listed company’s stock was trading at the time.

Consumer Portfolio’s share price soared 40% to $4.69 on the day Auto Experience’s buyout bid became public. Shares closed Wednesday at $3.95.

The Irvine, Calif.-based company earlier said Auto Experience mischaracterized its offer as all-cash because it included unspecified conditions and contingencies. It also said its only prior contact with Ellis was a “three-page May letter ... delivered to the company’s CFO, and rejected at that time.”

CPS works with auto dealers to buy and service consumer loans, funding its purchases primarily through securitization markets. About 75% of its business is financing used car sales, and its customers often have limited credit histories or past credit problems. Texas is one of its biggest markets.

The 834-employee company posted revenue of $346 million last year, with $5.4 million in profit.

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Subprime auto lender rejects Dallas firm’s $135 million unsolicited buyout bid - The Dallas Morning News
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