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Autobytel Acquiring Dealix for $25 M Puts Two Top Lead
Providers Together including UsedCars.com
May 2015
In case you missed it over the Memorial Day weekend, Autobytel has acquired Dealix, a
move that puts a leading provider of online automotive services connecting consumers
with dealers together with Dealix Corporation and Autotegrity, Inc. for $25M cash.
Both acquired companies are wholly-owned subsidiaries of CDK Global, LLC), for $25
million in an all-cash transaction, which includes a working capital adjustment
Why is this acquisition particularly significant to dealers?
First off, this transaction combines two prominent leaders in the automotive industry to
help dealers and manufacturers improve their businesses and sell more cars.
What Dealix brings to Autobytel:
For years Dealix has provided new and used car leads to dealerships, dealer groups, and
automotive manufacturers, and has consistently been ranked as a top auto sales lead
provider in the industry.
The company is also the operator of the highly successful car buying site, UsedCars.com,
one of the first used car search engines to connect consumers with a nationwide
inventory of quality used cars.
More Dealers in Autobytel Portfolio, New and Used:
The acquisition adds approximately 600 retail new dealers and 300 retail used dealers
to the Autobytel network, for a combined total of approximately 4,954 dealers. These
dealer additions do not include the 450 retail new and 170 retail used overlap dealers
that were receiving leads from both Dealix and Autobytel. Autobytel management
expects the acquisition to be accretive to net income in 2015.
What will Dealix dealers get out this new combination immediately?
This includes proprietary analytics technology and precision targeting tools that allow
dealers to launch more effective campaigns based on make and geography. These
products will be added to Autobytel's already expanding platform, including TextShield,
SaleMove, AutoWeb and GoMoto, which have redefined the way customers interact with
dealers.
Autobytel Acquiring Dealix for $25 M Puts Two Top Lead Providers
Together including UsedCars.com
Four Substantive Benefits for Dealers and their customers:
This acquisition is expected to provide a variety of significant benefits to the automotive
industry, including:

A greater commitment to delivering high converting, in-market consumers to
industry partners by integrating Autobytel's lead generation and customer
acquisition processes across the entire combined network of customers;

Enhanced analytics, consumer acquisition strategies, & product development teams;

A more robust level of service and support for industry customers through expanded
field teams, account management teams, and training groups;

An expanded suite of products for dealers and manufacturers, including mobile, next
generation video chat, direct-to-dealer website traffic programs, and expanded used
car lead services.
Jeff Coats, President of Autobytel, comments after another timely “buy:
"This acquisition creates an even more dynamic and effective automotive marketing
organization," "The addition of Dealix further expands our reach and influence in the
automotive industry by increasing our lead generation capabilities and the size of our
car dealer network, and also strengthens our relationships with auto manufacturers.
Autobytel's existing proprietary lead strategies and customer acquisition programs
produce estimated buy rates of at least three times the industry average. As such, by
combining these organizations, we expect to significantly improve the quality of leads
and related services that members of the Dealix network are accustomed to receiving."
"Developing a greater used car presence has been a key growth initiative for Autobytel
with the company's commercial acquisition team launching a used car beta test platform
earlier this year. Our internally-generated used car business has been ramping steadily
as we collect the information that allows us to optimize for quality, volume and margin.
However, UsedCars.com makes an immediate contribution to this initiative and will
accelerate its development."
What does the Dealix deal bring to Autobytel dealers?
In addition to UsedCars.com, Dealix brings Autobytel a suite of products that help
dealers grow their sales, backed by in-depth analytics. With offices in Cambridge and
the Silicon Valley area, Dealix leverages its close proximity to both Massachusetts
Institute of Technology (MIT) & the vast pool of tech personnel in Silicon Valley to hire
some of the brightest minds in the industry to develop products that optimize the car
sales process.
Autobytel Acquiring Dealix for $25 M Puts Two Top Lead Providers
Together including UsedCars.com
How did the Transaction Financing work?
The transaction was financed in part by Union Bank, N.A. through a newly established
$15.0 million senior secured term loan and by drawing on the $2.8 million remaining
balance of Autobytel's $8.0 million working capital revolver. The remainder was funded
by cash on hand. The term loan carries an interest rate of LIBOR plus 3.0% and is
amortizable over a period of five years. The revolver carries an interest rate of LIBOR
plus 2.5%.
What this purchase might mean for Autobytel Stockholders: A Revised
Business Outlook
Autobytel's guidance for fiscal 2015 has been revised upward with revenues now
expected to range between $128.0 million and $132.0 million, representing an increase
of approximately 20% to 24% from 2014. The company also now expects non-GAAP
diluted EPS in fiscal 2015 to range between $1.21 and $1.27, an increase of
approximately 46% to 53%.
Sourced from an Autobytel Press Release