Continuing its strategy of expanding beyond vehicle transactions, Irvine-based Autobytel.com Inc. said it will acquire W.G. Nichols, publisher of the Chilton series of auto repair manuals, for $17.5 million in cash and stock. Autobytel.com, one of the largest automotive e-commerce firms, also said it lost $6 million in the second quarter, nearly double its $3.1-million loss for the same period last year. Revenue for the quarter rose 70%, to $9.2 million from $5.4 million. The loss of 33 cents per share was an improvement on the 37 cents per share it lost during the same period last year and beat analysts' expectations of 40 cents, according to First Call Corp. Autobytel.com's shares rose $1.25 to close at $17.75 on Nasdaq.
The planned acquisition of privately held W.G. Nichols, based in West Chester, Pa., dovetails with the vehicle repair and service section that opened last month on Autobytel.com's Web site. Autobytel is paying $13 million in cash and 253,923 shares of stock to buy the publishing company. Unlike other Internet firms that have made acquisitions solely with stock or new debt, Autobytel is dipping into its $92-million cash reserves for this deal, in part because of the poor performance of its stock. "Our concern is that we believe our stock is greatly undervalued and we don't want to part with too much of it right now," Chief Executive Mark Lorimer said. The company hopes to close the deal by the end of September.
Nichols puts out more than 180 publications. Its Chilton series has covered auto repairs and procedures since 1925. Autobytel plans to use the Chilton data to send its subscribers reminders to have their cars serviced and to help people do the work themselves. Nichols, with its 35 employees, would continue to operate as a wholly owned subsidiary of Autobytel.com and be led by Richard Van Dalen, the publisher's chief executive.