KAR Auction Files Form 10 for SpinCo

Dear KAR Stockholder:

In February, KAR Auction Services, Inc. (“KAR”) announced plans to separate its salvage auction businesses. The separation will occur by means of a spin-off of a newly formed company named IAA Spinco Inc. (“IAA”), which will contain the pre-separation salvage auction businesses of KAR, currently operated by KAR’s subsidiaries, Insurance Auto Auctions, Inc. in the United States, Impact Auto Auctions Ltd. in Canada and HBC Vehicle Services Limited in the United Kingdom. KAR, the existing publicly traded company, will continue to operate its remaining business, including its whole car auction business and financing, logistics and other ancillary and related services. As two distinct publicly traded companies, KAR and IAA will be better positioned to focus resources on their respective businesses and strategic priorities.

We believe that separating our salvage auction and whole car auction businesses will create two strong companies that will be leaders in their respective markets and that will benefit from enhanced strategic focus and streamlined operating structures and optimized capital allocation. Each public company will offer investors a distinct and compelling investment opportunity based on different operating and financial models, end-market business cycles and strategic growth opportunities.

The separation will provide current KAR stockholders with equity ownership in both KAR and IAA. The separation is intended to be tax-free to KAR and KAR stockholders.

The separation will be effected by means of a pro rata distribution of 100% of the outstanding shares of IAA common stock to holders of KAR common stock. Each KAR stockholder will receive one share of IAA common stock for every one share of KAR common stock held as of the close of business on                , the record date for the distribution. No vote of KAR stockholders is required for the separation or the distribution. You do not need to take any action to receive shares of IAA common stock to which you are entitled as a KAR stockholder, and you do not need to pay any consideration or surrender or exchange your KAR common stock.

I encourage you to read the attached information statement, which is being provided to all KAR stockholders who held common stock on the record date for the distribution. The information statement describes the separation in detail and contains important business and financial information about IAA.

I believe the time is right for this separation as these two businesses are well-positioned to deliver value as independent companies. We appreciate your continuing support of KAR, and look forward to your future support of both companies.


Jim Hallett
Chairman of the Board and Chief Executive Officer
KAR Auction Services, Inc.

Link to Form 10: https://www.sec.gov/Archives/edgar/data/1745041/000114036118030430/0001140361-18-030430-index.htm

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