Autobytel (Nasdaq: ABTL) announced Wednesday that it would acquire its struggling competitor Autoweb.com (Nasdaq: AWEB) in a stock deal worth about US$15 million. The combined company will keep the Autobytel name.
According to the companies, the combined venture will have annual revenues of approximately $100 million and will bring together 7,000 car dealers and an average total of 2 million monthly Web visitors.
The deal is a lifeline for Autoweb, which moved into the dot-com critical list last month, when it was served with a delisting notice from the Nasdaq exchange.
Santa Clara, California-based Autoweb had been known to be searching for a buyer to save it from bankruptcy.
“During the last several months, we have made substantial progress in cost-cutting and efficiency initiatives to accelerate our profitability goal,” said Jeffrey Schwartz, Autoweb’s chief executive officer.
In November, Autoweb laid off 25 percent of its workforce in the face of slowing sales. Then in March, it restructured a slew of partnerships, a move Autoweb said would save $40 million a year.
Eyes on AIC
Irvine, California-based Autobytel, meanwhile, is focusing on Autoweb’s Automotive Information Center (AIC) division, which will continue to provide information and technology support to the automotive industry.
“Merging the AIC capabilities with those of Autobytel will add a key element to our future business strategy,” said Autobytel president and chief executive officer Mark Lorimer.
Four to Go
Consolidation continues to drive the online car sales world.
Autobytel started the consolidation trend in October 1999, when it bought Carsmart.com for $31 million. It has since linked with General Motors (NYSE: GM) and is currently operating a test drive of the automaker’s own multi-dealer e-commerce venture in the Washington, D.C. area.
The latest merger combines two of the largest online car firms. In addition to Autobytel, there are three other major players in the market: AutoNation, which has a partnership in place with America Online, MSN’s Carpoint, and Amazon partner CarsDirect.com.
The deal will pay stockholders of Autoweb 53 cents for each share they hold, a premium on Tuesday’s closing price of 29 cents but a far cry from the $50 level reached shortly after Autoweb went public in March 1999.
Autobytel shares have fared only slightly better. Far below the $58 hit on the day of its IPO, the stock closed at $1.50 on Tuesday.