Autobytel.com Will Buy Rival Internet Car-Shopping Service for $14.2 Million
Autobytel.com Inc. in Irvine said Wednesday that it has agreed to buy rival Internet car-shopping service Autoweb.com Inc. for $14.2 million in stock, plus assumed debt, to expand its customer base.
The acquisition would solidify Autobytel.com’s position as market leader and broaden its customer base, giving it annual sales of more than $100 million and about 2 million visitors to its Web sites each month, the companies said. It would have more than 7,000 dealers and 24 auto makers as customers, they said.
Each of Autoweb.com’s 29.5 million shares will be exchanged for 0.3553 of an Autobytel.com share, the companies said. Based on Wednesday’s close of $1.35 for Autobytel.com, the agreement values Autoweb.com at 48 cents a share, 66% above its 29-cent close Tuesday on Nasdaq. In addition to the stock, Autobytel.com would assume $314,000 in debt.
“Our combined strengths will allow us to extend our No. 1 market share further while broadening our customer base,” Mark Lorimer, Autobytel.com’s chief executive, said in a statement.
Internet retailers such as Autobytel.com and Autoweb.com compete with auto makers and dealers for growing online sales of cars and trucks. Yet neither company has made a profit since initial public offerings in March 1999, and Autoweb.com’s shares had fallen about 94% in the past year as the company struggled with losses and cut its work force by 25%.
About 54% of new-vehicle buyers use the Internet to help research and purchase cars, and that’s expected to grow to 73% by 2003, General Motors Corp. said in a February filing about an online sales venture.
Autobytel.com and Autoweb.com, based in Santa Clara, get revenue through referral fees paid by dealers and through marketing agreements with auto makers. Car shoppers who use their services aren’t charged.
The acquisition is subject to regulatory review and votes of both companies’ shareholders. Lorimer would be chief executive and president of the combined company, while Autobytel.com Chairman Michael Fuchs would keep that post. Jeffrey Schwartz, chief executive of Autoweb.com, would be vice chairman.
Autobytel.com shares fell 14 cents Wednesday on Nasdaq and have declined 79% in the past year. Autoweb.com rose 11 cents Wednesday to 40 cents a share.
*
Bloomberg News and Dow Jones Newswires were used in compiling this report.
