October 2, 2015 — No, it’s not 2002, but it’s understandable if you were somewhat confused or experienced feelings of deja vu if you saw the news that Autobytel acquired AutoWeb yesterday.
For those of you who were around in 2002, you’re right if you remembered Autobytel acquired a another company also named AutoWeb back then. (That deal was a stock swap valued at about $15.6 million).
Autobytel kept the AutoWeb name and URL following that acquisition and then sold the trademarks and domain (www.AutoWeb.com) to the new company when it was founded in 2013. Autobytel also took a 15% stake investing investing $2.5 million in the new AutoWeb.
Yesterday’s transaction is an all-stock deal (see the details below).
AutoWeb has become a critical piece of CEO Jeff Coats’ strategy the last couple of years and is part of the “secret sauce” that has helped fuel Autobytel’s comeback.
AutoWeb’s solution is an auction-based pay-per-click bidding platform that uses proprietary technology to analyze web traffic and adjusts advertiser costs accordingly based on traffic quality. The company places ads on various automotive-related websites and then sells the traffic that is created from those ads.
AutoWeb’s founders, Matias de Tezanos, Julio Gonzalez-Arrivillaga and Jose Vargas, have a strong track record with pay-per-click technology having created several companies that they have since sold: BrokersWeb (Vantage Media); Hoteles.com (Expedia); ClickDiario Network (Newscorp-Fox International Channels).
Autobytel has invested or acquired several companies over the last year or so, the most recent was its $25 million purchase of Dealix earlier this year. Other acquisitions include TextShield, SaleMove and GoMoto.
In addition to announcing the acquisition, Autobytel also raised its revenue guidance for the third quarter fro $37.6 million to $39 million. Total year revenue for 2015 should come in around $132 million to $134 million, up from prior guidance of $128 million to $132 million. Autobytel reduced its EPS guidance though, down $0.04 to $1.17 to $1.23 due to dilution of the stock caused by the acquisition.
Meanwhile, Autobytel’s stock price jumped more than 15% to over $18 a share today on the news of the acquisition.
Three of AutoWeb’s executives, Matías de Tezanos, José Vargas and Robert Mylod, have been appointed to the Autobytel board of directors.
Autoweb’s CEO and director de Tezanos has also been named as Autobytel’s chief strategy officer, a newly created position in the company.
Vargas, AutoWeb’s president and director, is now Autobytel’s chief revenue officer – also a new position.
Meanwhile, Mylod, also a director for AutoWeb, is currently the managing partner and founder of Annox Capital Management, a private investment firm.
Transaction Details (from the press release)
Autobytel issued 170 thousand series B junior convertible preferred shares, each is convertible into 10 shares of common stock.
Autobytel also issued warrants for 150 thousand series B preferred shares. The warrants have an exercise price of $184.47 (10 times the $16.77 closing price of the company common stock on the NASDAQ stock exchange on Wednesday along with a 10% premium). They are exercisable three years after issuance in three tranches based on the performance of the closing price of the company common stock during the term of the warrants. They expire on the seventh anniversary of the date issued.