Dealertrack Ready to ‘Transform Automoti -

Immediately after announcing the move that Dealertrack Technologies’ top executive contends will leave the company “positioned to transform automotive retailing,” dealers evidently gave Mark O’Neil their approval of the acquisition of Dealer.com in a deal approaching $1 billion.

During a conference call less than two hours after the company made the acquisition announcement public while the industry prepared for Christmas, Dealertrack chairman and chief executive officer Mark O’Neil told investment analysts: “The dealer reaction has been phenomenal. It’s been nothing but kudos from virtually every dealer. This is exciting.”

The companies entered a definitive agreement on Dec. 19, under which Dealertrack would purchase the entire equity of Dealer.com for about 8.7 million shares of Dealertrack common stock and $620 million cash.

Dealertrack’s share price jumped more than 15 percent or $6 on the day of the announcement to settle at $49.46. That amount pushed the entire value of the deal to nearly $1 billion

The deal is subject to customary post-closing adjustments, the companies said, and is expected to close in the first quarter of 2014 (subject to regulatory approval). 

O’Neil explained how this acquisition didn’t unfold like typical transactions where the seller might have been courting a handful of suitors.

“There was no bidding process. This was a long-term relationship of getting to know each other and coming to a mutual conclusion that we were a good fit together,” O’Neil said.

“There wasn’t a need to shop it. Culturally, we’re unique enough individually, and collectively there probably weren’t a lot of fits to go after other opportunities. This was a natural and I think we both saw it and put the deal together,” he continued.

Dealer.com CEO Rick Gibbs — who will become executive vice president and group president of Dealertrack’s Digital Marketing solution team once the deal is closed — elaborated about why all dealers should be cheering the move.

“One of the things we found extremely attractive about Dealertrack is that they were integrating the various components at a core level when a lot of the competitors out there were trying to bolt a bunch of companies together through a single sign-on solution,” Gibbs said.

“Dealertrack was taking things at the core data level, which allows the different systems and data that we all operate in, to seamlessly move throughout the enterprise,” he continued.

“This results in more efficiency for the dealer and an ease of use that they’ve never seen before. When we started diving into the diligence, we realized that we could integrate Dealertrack’s technology into our and have this seamless transfer of data, proving more consistency and making it more efficient for the dealer,” Gibbs went on to say.

During nearly an hour-long presentation and question-and-answer session, both O’Neil and Gibbs reinforced the theme of how the companies plan to succeed because of “innovation through integration.” Before the public announcement, the executives said the sales and technology teams from both Dealertrack and Dealer.com met and shared experiences and processes.

“There is very little end-to-end workflow integration in this industry. There are very many technology players trying to play discrete roles and trying to get all of those to work together in an end-to-end integrated workflow is a challenge,” O’Neil said.

“We’re very aligned in the way we’re architected. It’s going to be easy to bring those technologies together,” he continued.

“Feedback from both of our sales forces and both technology teams overwhelmingly embraced this that this (acquisition) is terrific for a go-to-market perspective,” O’Neil went on to say.

O’Neil acknowledged there are going to be some challenges and overlap of resources that are going to have to be smoothed throughout 2014. But the Dealertrack leader is ready to find out how the two companies can work together to help dealers flourish.

“We are positioned to transform automotive retail,” O’Neil reiterated as he closed the conference call. “It’s an extremely exciting story. It’s a growth story. It’s an innovation story. It’s a client-focused story. There are many good elements here that make this just a home-run transaction.”

Nick Zulovich can be reached at nzulovich@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.