Autobytel to drive off with Autoweb

The consolidation of auto-buying sites continues, with Autobytel.com announcing Wednesday that it would buy rival Autoweb.com for US$15.6 million in stock.

Both companies operate so-called referral sites, which allow car shoppers to research a car or truck online and get a price quote before being referred to a local dealer to actually purchase the vehicle. The new combined company, which would be called Autobytel, would have a network of 7,000 dealerships nationwide and is projected to have sales exceeding $100 million annually.

Autobytel pioneered the online car-buying market with its launch in 1995. The Internet boom of the late 1990s fueled the rise of several other online car-buying sites, many of which have since gone out of business or have been acquired by larger rivals. Analysts say they expect more mergers and acquisitions as these companies struggle to find a business model that can sustain them.

Under the acquisition deal announced Wednesday, stockholders of Autoweb would exchange each of their shares for .3553 shares of Autobytel stock. Autoweb has 29.5 million shares outstanding, which are valued at about 53 cents based on Autobytel's closing share price on Tuesday.

The move marks Autobytel's second acquisition in little more than a year. The company bought Carsmart.com for $32 million in stock and cash in 2000.

Neither Autobytel nor Autoweb are profitable, though Autobytel executives say they expect that the company will be in the black by the third quarter of this year. In recent months, Autoweb had been limping along, and it said the U.S. Securities and Exchange Commission was considering delisting its stock because it was consistently trading for less than $1. Autoweb said it brought in investment bankers to explore options for the company, including a sale.

Autoweb shares had traded as high as $34 in 1999, after the company's initial public offering. Autobytel, which also went public in 1999, traded as high as $40.

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