Autobytel acquires rival Autoweb in stock-swap deal

Online car broker Autobytel.com Inc. yesterday drove home a bargain in its acquisition of rival Autoweb.com Inc. in a stock-swap deal valued at $15.6 million.

Irvine, Calif.-based Autobytel agreed to swap 0.36 shares of its own stock for each of Autoweb's 29.5 million shares. The cost is equivalent to 53 cents per share, a purchase price that is 83% more than Autoweb's closing share price of 29 cents per share on Tuesday.

Just over a year ago, Autoweb's stock closed at $6.44, giving it a market cap of about $190 million. But the stock value of both companies has plummeted in the bear market, with Autobytel's stock tumbling from a year-high of $8.53 per share last June to a year-low of $1.33 on Monday.

"The pricing dynamics were right," said Autobytel CEO Mark Lorimer in a conference call yesterday. Lorimer also said in a statement that the merger would produce a company with $100 million in annual revenue and one that would be profitable by the third quarter of this year, excluding merger costs.

Both Autobytel.com and Autoweb.com will continue to operate as separate Web sites. But the acquisition will consolidate Autobytel's channel of 4,800 dealers in the U.S. and Europe with Autoweb's network of 5,000 dealers. The two companies expect to have 7,000 unique dealers combined, officials said.

Under the terms of the deal, Jeffrey Schwartz, Autoweb's CEO, will become vice chairman of the merged company, Autobytel Inc. Two other Autoweb executives will also get seats on Autobytel's board of directors. Lorimer will remain in his post as CEO.

"This is an eyeball gain, instead of an attempt to increase revenue," said Thilo Koslowski, an automotive analyst at Gartner Inc. in Stamford, Conn. "They will expand their customer base on the consumer side but not from the dealer perspective."

Both firms get the majority of their revenue from selling leads to automotive dealers. Koslowski said to gain greater consumer exposure, the merged company will need to strike more partnership deals with content providers, such as the partnership Autoweb already has with Dulles, Va.-based America Online Inc. That marketing deal links AOL members to Autoweb's Web site.

Autobytel posted a wider income loss of $29 million, or $1.45 per share, for the fiscal year ended Dec. 31, 2000, compared with an earnings loss of $23.3 million, or $1.48 per share, in 1999. Revenue for 2000 rose 65% from 1999 to $66.5 million last year. In January, Autobytel held $81.9 million in cash and equivalents.

For its fiscal year ended Dec. 31, 2000, Autoweb reported widened losses of $38 million, or $1.35 per share, compared with a loss of $18 million, or 85 cents per share, in 1999. Revenue grew 59% to $52.3 million from $32.8 million in the previous year.

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Copyright © 2001 IDG Communications, Inc.

  
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