Acquiring the Concours d’Elegance of America and planning its move to the Detroit Institute of Arts next year offers a window into the motivations for crafting a deal to take Michigan-based Hagerty public.
As McKeel Hagerty, the company’s CEO, put it, expect to see “more great car stuff coming.”
Hagerty, which is headquartered in Traverse City and specializes in insuring classic cars, and Aldel Financial announced a merger deal Wednesday that would see the company go public and trade on the New York Stock Exchange under the ticker symbol HGTY.
McKeel Hagerty said it will take a few months to get the deal, valued at $3.13 billion, fully closed, but afterward, the company will be ready for a future that fans of car culture should be excited about. Hagerty employs about 1,550 people, with 760 in Traverse City and a “significant presence” in Ann Arbor, and the company expects to hire several hundred more.
Hagerty, which insures more than two million vehicles globally but also has other automotive projects such as its member-focused Hagerty Drivers Club,will keep its home base in Michigan, be managed by the same team and be predominantly owned and controlled by the Hagerty family, McKeel Hagerty said.
The company it’s merging with, Aldel Financial, is a special purpose acquisition company, “whose business purpose is to effect a merger” or related activity, according to a news release. Aldel raised $116 million in an initial public offering in April. The merger with Hagerty is expected to generate $820 million in gross proceeds. Aldel’s CEO is Robert Kauffman, who co-founded Fortress Investment Group and is a racing team owner and driver, according to CNBC.
State Farm is among the investors in the deal. State Farm and Hagerty recently announced that Hagerty would manage State Farm’s new classic car insurance program.
McKeel Hagerty said the company, which was founded in 1984, is positioned for growth. Hagerty has been expanding its auto events portfolio. That now includes the Amelia Island Concours d’Elegance in Florida and the Concours d’Elegance of America, which ended its run last month at the Inn at St. John’s in Plymouth.
The Concours d’Elegance of America’s move to Detroit during the fall of 2022, with the specific date yet to be determined, is likely to mean an expansion of the event. McKeel Hagerty said the plan is to work not just with the DIA but also neighboring institutions.
More:Top collector cars coming to DIA in 2022 for Concours d’Elegance of America
Schools also figure in the planning for these events, whenever possible, to show school-age children about the history and heritage of cars, he said. He said the company’s purpose is to preserve driving and car culture along with being good stewards of special cars.
The enthusiasm for high-end auto events might seem at odds with the challenges traditional mainstream auto shows have faced in recent years. Before coronavirus-related cancellations last year, auto shows were already in a state of flux.
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McKeel Hagerty said many luxury brands, especially at the top of the market, have been moving toward the various Concours and “lifestyle events,” where they can get more directly involved with their target audience rather than “blasting out to the general public when they’re a car company that just sells a few thousand cars a year.”
Despite the evolving nature of the auto industry, including the shift toward electrification, McKeel Hagerty said the company is bullish on the future. Vehicle drivetrains will be electric, although a full transition will take decades, he said, but that electric future doesn’t mean the experience of driving needs to be so mundane it turns people off.
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“Fast electric cars are fun, but if they just kind of look like a jelly bean or something, that’s not going to be very attractive to future generations,” McKeel Hagerty said. “A lot of what makes people collect cars and want them, you know, for lifestyle enjoyment, pleasure experiences, is the way they look and the way they perform and kind of how they make you feel.”
Contact Eric D. Lawrence: elawrence@freepress.com. Follow him on Twitter: @_ericdlawrence. Become a subscriber.