Dallas company makes $135 million buyout bid for subprime auto lender

A Dallas company led by auto finance veteran Samuel Ellis is offering to buy out a California firm that specializes in subprime auto loans for $135 million.

Auto Experience Inc., which Ellis formed in 2018, said it made the all-cash bid in a letter to the board of directors of Consumer Portfolio Services Inc. after trading markets closed Wednesday. Its offer amounts to $6.18 a share — an 84% premium over where the Nasdaq-listed company’s stock ended Wednesday.

The suitor gave CPS until Oct. 30 to respond.

Based in Irvine, Calif., 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.

The 834-employee company posted revenue of $346 million last year, with $5.4 million in profit. It has recorded 28 straight quarters of pre-tax profit, according to a company investor presentation.

Auto Experience brings proprietary technology and an experienced leadership team to the table, creating “a strong national player that already has a toe-hold in more than 8,000 automobile dealerships across the U.S.,” Ellis said.

Ellis previously founded and led Dallas-based DriverUp, an online auto finance marketplace. He said technology from that venture would dramatically improve CPS’ customer buying experience, replacing the laborious signing of loan documents with a fully online application, and aid dealers in selling vehicles on their lots faster.

“We want this to be exciting and fun,” he said.

Nasdaq Inc. is considering moving operations out of New Jersey if a proposal to tax financial transactions in the state becomes law.