ADESA, Inc. - Initial Public Offering in 1992

Initial Public Offering in 1992

Shortly after forming ADESA, Hockett and Pedigo announced plans to sell shares to the public to help fund further acquisitions, as well as to pay for construction of a new auction in Buffalo, New York, of which the firm would own 80 percent. In April 1992 two million shares of stock were sold at $11.50 each. Hockett retained controlling interest, with 56 percent of the total.

After the initial public offering (IPO) was completed, the firm purchased the remaining 20 percent of the Buffalo auction, and the fall of 1992 saw the purchase of Concord Auto Auction in Acton, Massachusetts, for $16 million. Revenues for the year topped $45 million, up from nearly $29 million the year before. Net earnings stood at $3.6 million.

In the spring of 1993 ADESA acquired two auctions in Knoxville, Tennessee, which it would continue to operate until a new, larger facility in the area was completed. In July the firm entered Canada, purchasing Montreal Auto Auction in Quebec province, the second largest auto auction in the country. ADESA would later build a new facility there. The company also secured $20 million in bank loans to fund more growth, and in the fall sold an additional 2.5 million shares of stock.

ADESA's Canadian operations were soon expanded with the acquisitions of auctions in Halifax, Nova Scotia, and Ottawa, Ontario. The latter site offered a salvage auction every other week, which was the company's first foray into the sales of wrecked vehicles for parts.

In January 1994 the firm acquired a company called Automotive Finance Corporation, which would enable it to better provide customers with onsite financing. The following month Gulf Coast Auto Auction, Inc. of Bradenton, Florida, and Northfield Auto Auction Corp. of Cleveland also were acquired. Their names were changed to ADESA Sarasota/Bradenton and ADESA Cleveland, respectively, in keeping with the company's usual practice.

In the spring the firm bought a vacant General Motors (GM) plant in Framingham, Massachusetts, for $8 million, to which it would relocate its Concord auction. The 2.9 million-square-foot facility would comprise the nation's largest indoor auction site. It was primarily purchased to enable ADESA to hold auctions in the winter without interruptions from bad weather.

The summer of 1994 saw an agreement reached with General Motors Canada to sell 42,000 rental repurchase vehicles over a three-year span in that country. In August another auto auction was acquired in Miami, Florida, and in September one was purchased in Austin, Texas. Two months later Gary Pedigo sold most of his stake in ADESA and left the company to buy a Chevrolet dealership in Indianapolis.