Charlotte-based Driven Brands, the largest automotive services company in North America, agreed to sell its U.S. car wash business for $385 million to Express Wash Operations, a smaller rival also based in the Queen City that operates as Whistle Express.
Driven Brands also said CEO Jonathan Fitzpatrick will step down on May 9 and be succeeded by Chief Operating Officer Daniel Rivera. Fitzpatrick has been the company’s CEO since 2012 and will remain the board’s non-executive chair.
“This transaction will enable Driven Brands to reduce debt and enhance our focus on our growing Take 5 Oil Change brand and our stable, cash-generating franchise brands,” Fitzpatrick said in a release. “We are confident it will better position the company to execute on our strategic initiatives and deliver long-term value to our shareholders.”
Under the terms of the agreement, Whistle agreed to pay Driven Brands $255 million in cash and provide an interest-bearing seller note in the principal amount of $130 million. The transaction is expected to close in the second quarter this year.
Driven Brands said it wants to reduce its net leverage to three times or less by the end of 2026.
The combined company will have 530 locations across 23 states, making it the largest express car wash company in the United States.
“Take 5 Car Wash is an extraordinary brand with a great team, and by combining our strengths, we’re primed to transform the industry and claim our spot as the go-to car wash destination in the U.S.,” Whistle Express CEO Jose Costa said in a release.
In addition to re-branding all Take 5 Car Wash locations as Whistle Express, Whistle said it will make major investments in improved technology, membership programs and sustainable practices.
Whistle Express was started in Charlotte in 2020 and now has 147 locations in 10 states. In 2023, Whistle Express received a major investment from Los Angeles-based private equity group Oaktree Capital Management to finance growth.
Driven Brands went public in January 2021, opening at $27. It has expanded in various automotive service sectors, led by its Take 5 oil-change unit. The stock has been a disappointment, declining more than 40% since the IPO. It closed at $15.32 Monday, and has traded between $10.59 and $17.45 in the past year.
In 2023, Fitzpatrick received a stock award of $22 million as part of his total compensation of $29.1 million for the year, according to the company’s most recent proxy.
Roark Capital, an Atlanta-based investment company with many retail holdings, controlled 61.9% of Driven Brands’ shares, the proxy noted.