Automotive dot-com consolidation continues as pioneer third-party lead generator Autobytel.com acquires its struggling competitor, Autoweb. Autobytel President and CEO Mark Lorimer describes it as an “acquisition by merger.”
The principals expect to complete the deal in the third quarter. It will involve a tax-free exchange of stocks with an estimated value of $15 million. Autoweb stockholders will receive 0.3553 shares of Autobytel common stock for each share of Autoweb common stock.
Both companies have seen their stock prices plummet in recent years. Autoweb was on life support –- it closed at 29 cents a share on Wednesday. Autobytel, meanwhile closed at $1.49 a share.
Despite the low stock prices, Both Mr. Lorimer and Jeffrey Schwartz, CEO of Autoweb claim the merged company will see profitability in the third quarter. Towards that goal, Autoweb already has begun cost cutting, says Mr. Schwartz.
Autobytel.com will change its name to Autobytel Inc. to reflect its growing portfolio of services and products offered to its dealership network and consumers. It was the first major Internet auto referral service, attracting prospective car buyers to its website, and then connecting them to dealership clients.
Both web sites will continue to operate, so consumers will not notice any change in product.
After accounting for common dealer customers, the new company will service about 7,000 dealers and maintain relationships with 24 manufacturers.
It has not been determined yet whether staff reductions will result from the merger, say company officials.
Some dealers are expressing concern about rumors that Autobytel fired 50% of its sales staff on Tuesday.
Mr. Lorimer, however, tells Ward’s Dealer Business that rumors of staff cuts are false.
“We have been involved in a restructuring of our sales force,” he says. “But this is our third restructuring – and the previous two resulted in higher customer satisfaction returns for Autobytel.”
It’s realigning its sales force to account for a higher level of sophistication among its dealers. “When we first started, much of our training involved showing the dealer how to hook up the PC,” says Mr. Lorimer. “Now, we’re involved in training them about servers and databases.”