Autobytel snaps up rival in $15.6 million deal
The online car dealer says it has agreed to acquire Autoweb to form a souped-up company with revenue of more than $100 million a year.
The combined company is projected to drum up revenue of over $100 million per year and will create a Web site serving some 7,000 auto dealers and 24 international auto manufacturers. The new entity will operate under the Autobytel name, which will incorporate several online brands including Autobytel, Autoweb, Carsmart, Autosite, DealerSites and AIC (Automotive Information Center).
Under the terms of the deal, Autoweb stockholders will receive 0.3553 shares of Autobytel common stock for each share of Autoweb common stock. According to a recent filing with the Securities and Exchange Commission, Autoweb has about 29.5 million shares outstanding. Based on Autobytel's closing price Tuesday of $1.49 per share, the transaction would be valued at approximately $15.6 million.
Forrester Research has estimated that the online auto market will grow to about $16.6 billion in 2004 from about $400 million in 2000. Nearly 40 percent of new car buyers browsed automotive sites and did research on cars over the Web in 1999, according to J.D. Power & Associates, an automotive research and marketing firm.
Still, many players have had a difficult time surviving in the market, as most consumers continue to use the Internet solely to research cars rather than actually purchasing them online. Some players have already been scooped up or are weighing their financial options.
Earlier this year, CarsDirect.com nabbed Greenlight.com, an automotive Web site backed by e-tailing giant Amazon.com, for an undisclosed amount. The acquisition came after recent setbacks for both. Last December, CarsDirect withdrew its planned initial public offering, and Greenlight laid off about 25 percent of its staff.
Meanwhile, Autoweb, which has flirted with a Nasdaq delisting because of its low share price, has also recently been seeking a buyer.
As part of the acquisition, Autobytel CEO Mark Lorimer will retain his titles, and Michael Fuchs will remain as chairman. Meanwhile, Autoweb CEO Jeffrey Schwartz will join the newly combined company as vice chairman. In addition, Autobytel, based in Irvine, Calif., has agreed to elect two executives from Autoweb to the company's board of directors once the transaction closes.
The deal is subject to customary closing conditions, regulatory approvals and shareholder approval of both parties. Lehman Brothers advised Autobytel on the transaction.
The newly combined company will eventually trade under Autobytel's ticker symbol, "ABTL."