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Autobytel Acquires AutoNation's AutoUSA

January 14, 2014

IRVINE, Calif. — This week, Autobytel Inc., a company dedicated to connecting consumers with dealers and OEM, announced it has acquired Ft. Lauderdale-based AutoUSA, the Web-based auto leads and services provider, from AutoNation Inc.

“The transaction solidifies our leadership role in the industry, enabling us to offer an even larger base of dealers and automakers top quality products, including leads that convert to sales at nearly three times an estimated industry average, and a wide range of mobile products designed to sell more cars.”

The purchase price included $10 million in cash and a $1 million, 6% convertible note payable in one lump sum in five years and convertible to Autobytel common stock at a conversion price reflecting a 20% premium over the price of Autobytel’s common stock on the date of closing. The agreement also warrants giving AutoNation the right to purchase approximately $1 million of Autobytel’s common stock at an exercise price reflecting a 5% premium over the price of the stock on the date of closing.

The transaction was financed by Union Bank N.A. through a newly established $9 million senior secured term loan, and by drawing on Autobytel’s existing secured working capital revolver. Both the term loan and the revolver carry interest at a rate of LIBOR plus 2.5%. The term loan is amortized over a period of four years.

AutoUSA generated 2013 revenues of approximately $30 million, with positive operating income and cash flow. The company believes that the transaction will be accretive to Autobytel’s 2014 results.

Autobytel said the acquisition expands its reach and influence in the industry by increasing its national new- and used-car dealer network to more than 5,200 from approximately 3,800, while boosting its business with auto manufacturers. It also enables the company to offer its new mobile and SaleMove products to a larger customer base, while continuing to build on relationships with OEMs and large dealer groups, including the AutoNation family of dealers.

Phil DuPree, president of AutoUSA, has joined Autobytel as executive vice president, president of dealer services. As an inducement for joining the company, DuPree was granted an option to acquire 40,000 shares of Autobytel common stock at an exercise price equal to the closing price of Autobytel’s common stock on the acquisition closing date. The option will initially vest based on certain financial performance criteria related to Autobytel’s dealer services group and then on DuPree’s time of service with Autobytel.

“AutoUSA brings a new, high-quality client base to the Autobytel family and strengthens our existing relationship with AutoNation, which is the largest U.S. automotive retailer,” said Jeff Coats, Autobytel’s president and CEO. “The transaction solidifies our leadership role in the industry, enabling us to offer an even larger base of dealers and automakers top quality products, including leads that convert to sales at nearly three times an estimated industry average, and a wide range of mobile products designed to sell more cars.

Mike Maroone, president and COO of AutoNation Inc. added: “Since 2000, AutoUSA has developed very strong relationships with dealers across the country. The combination of Autobytel and AutoUSA adds strength to both organizations and represents an opportunity for consolidation in an industry segment that remains fragmented. This combination benefits automotive consumers, dealers and manufacturers alike.”

In addition to AutoUSA, Autobytel also recently acquired Advanced Mobile LLC, which provides a full lineup of mobile products and services, and TextShield, a web-based portal that allows dealers to centrally manage text communications. The company also recently made a strategic investment in SaleMove, which enables auto dealers and manufacturers to enhance the online shopping experience by interacting with consumers in real-time. These new services will be available to Autobytel’s expanded network of automotive dealers and manufacturers.

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