Dealertrack Technologies, Inc. (TRAK), a provider of software solutions to automotive retailers, has agreed to acquire Dealer.com, a provider of marketing and operations software as well as services for the automotive industry, the two companies said Thursday.
The deal, worth about $1 billion, will enable the combined company to provide dealers, OEMs, and other industry partners with a broad array of integrated solutions. Shares of Dealertrack gained more than 6 percent in extended trades following the announcement.
Under the terms of the deal, New York-based Dealertrack will acquire all the equity of Dealer.com for about 8.7 million shares of Dealertrack's common stock and $620 million in cash, subject to customary post-closing adjustments. The 8.7 million shares are valued at $372.36 million, based on Thursday's closing stock price of $42.80.
Dealertrack expects to finance the cash portion of the purchase price through its cash on hand and with fully committed debt financing. The companies expect the deal to close in the first quarter of 2014.
Mark O'Neil, chairman and CEO of Dealertrack said, "By joining forces with Dealer.com, we will be able to provide dealers, OEMs, and other industry partners with a deep and broad array of integrated solutions. Dealer.com and its team, whom we've long admired and respected, complement our solutions, catapulting our vision of delivering the market leading suite of integrated technologies capable of transforming automotive retailing even further."
Dealertrack expects the transaction to be accretive to its adjusted net income per share.
Established in 1998, Dealer.com has helped bring automotive dealerships online. The company has grown to 830 employees across its Burlington, Vermont, headquarters and Manhattan Beach, California, office. The company serves about 7,000 U.S. dealers with its integrated suite of products.
Dealer.com expects to generate annual revenue in excess of $230 million for 2013, representing year-on-year growth of more than 25 percent compared to 2012.
Dealertrack said it plans to establish Dealer.com's Burlington headquarters as a center of excellence for digital marketing solutions, along with its own Dallas, Texas, office. Based on the strength of Dealer.com's brand, Dealertrack will retain the Dealer.com name in the marketplace to represent Dealertrack's complementary set of digital marketing products and services.
Upon closing of the deal, Rick Gibbs, chief executive officer of Dealer.com, will become executive vice president and group president of Dealertrack's digital marketing solution team.
TRAK closed Thursday's regular trading session at $42.80, down $0.15 or 0.35 percent on a volume of 323,131 shares. However, in extended trades, the stock gained $2.80 or 6.54 percent to $45.60.
by RTT Staff Writer
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