LAKE SUCCESS, N.Y.,
Aug. 22, 2011 /PRNewswire/ --
DealerTrack Holdings, Inc. (Nasdaq: TRAK), today announced that it
has signed an agreement to sell its wholly owned subsidiary, ALG,
Inc., to TrueCar, Inc. In connection with the sale,
DealerTrack has entered into additional commercial arrangements
with TrueCar, including a perpetual, royalty-free license for
DealerTrack to use certain ALG intellectual property and data in
its products and services.
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The transaction is structured as a tax-free reorganization, and
in consideration for the sale of ALG, DealerTrack will receive a
15.0 percent equity interest in TrueCar and warrants to increase
its ownership interest to up to 19.9 percent. As part of the
transaction, DealerTrack will have the limited right to appoint a
director to TrueCar's Board. The sale is expected to close
in the fourth quarter, subject to customary closing conditions and
regulatory approval.
DealerTrack expects to recognize a pre-tax gain for GAAP
purposes of at least $40 million on
the sale, but does not expect this transaction to have an impact on
2011 non-GAAP guidance. DealerTrack will provide additional
details on the financial impact of this transaction during its
third quarter earnings call.
Mark F. O'Neil, chairman and chief executive officer of
DealerTrack, commented, "This transaction exemplifies our strategy
of effectively allocating capital to maximize value for DealerTrack
stockholders. We are not only selling a business which we
have grown significantly since we acquired it back in 2005, we are
making an investment in a high-growth, progressive company
that is positively impacting the way cars are retailed in the U.S.
market."
Scott Painter, chief executive
officer of TrueCar, commented, "We believe that, in combination
with ALG's core competency of providing industry-leading
residual values for the automotive market, TrueCar's business will
be enhanced and continue to generate exceptional growth as more of
the car buying process moves online. In addition, we believe that
our acquisition of ALG will significantly improve our relationship
with OEM's." Painter continued, "Lastly, we are pleased to be
entering a strategic partnership with DealerTrack which includes a
two year commitment to help us effect a smooth transition of the
ALG business."
Based in Santa Monica,
California, TrueCar simplifies and clarifies the car buying
process for consumers by providing accurate market information
which helps buyers make better, more informed decisions.
TrueCar saves consumers time and money by providing
price clarity and transparency, while delivering the
benefits of higher close rates and vehicle sales to
dealers. TrueCar reaches consumers via two channels.
The direct channel is a website that provides vehicle pricing
transparency to consumers and dealers and the indirect channel is a
private-label affinity buying program for major brands. The
TrueCar management team were founders of CarsDirect, and have a
very deep background in retail automotive technology.
Evercore Partners acted as financial advisor and O'Melveny &
Myers provided legal advice to DealerTrack in connection with this
transaction.
About DealerTrack (www.dealertrack.com)
DealerTrack's intuitive and high-value software solutions and
services enhance efficiency and profitability for all major
segments of the retail automotive industry, including dealers,
lenders, OEMs, agents and aftermarket providers. DealerTrack,
whose solution set for dealers is the industry's most
comprehensive, operates the largest online credit application
network in the United States,
connecting over 17,000 dealers with more than 1,000 lenders.
DealerTrack's Dealer Management System (DMS) provides dealers
with easy-to-use tools and real-time data access to enhance their
efficiency. DealerTrack's Inventory offerings provide vehicle
inventory management and merchandising solutions to help dealers
drive higher in-store and online traffic with state-of-the-art,
real-time listings – leading to accelerated used-vehicle turn rates
and higher dealer profits. DealerTrack's Sales and F&I
solutions allow dealers to streamline the entire sales process as
they structure deals from a single integrated platform. Its
Compliance offering helps dealers meet legal and regulatory
requirements, and protect their assets. DealerTrack also
offers additional solutions for the automotive industry, including
electronic motor vehicle registration and titling applications,
paper title storage, and digital document services.
DealerTrack's family of companies also includes data and
consulting services providers ALG and Chrome Systems. For more
information visit: www.dealertrack.com.
About ALG (www.alg.com)
Based in Santa Barbara,
California, ALG is a leading provider of data and consulting
services to the automotive industry. ALG publishes the
"Automotive Lease Guide" — the standard for residual value
projections in North America, and
has been forecasting automotive residual values for over 45 years
in both the U.S. and Canadian markets. ALG is a company of
DealerTrack Holdings, Inc.
About TrueCar Inc. (www.truecar.com)
TrueCar Inc., is an automotive solutions provider focused on
changing how cars are sold by providing a significantly better
customer experience while helping qualified dealer partners to gain
incremental market share and reduce costs. TrueCar.com is a
transparent, visual publisher of new car transaction data.
TrueCar.com price reports help both dealers and consumers to agree
on the parameters of a fair deal by providing an accurate,
comprehensive and simple understanding of what others actually paid
for the identically equipped new car over the last 30 days both
locally and nationally. TrueCar, Inc. works with a nation-wide
network of nearly 5,000 Certified Dealers that provide up-front,
no-haggle, competitive pricing to assist some of the nation's
largest and most well respected membership and service
organizations to meet the auto buying needs of their members and
customers. These partnerships include American Express, AAA Clubs,
USAA and more than 60 others. Collectively these audiences
represent over one million in-market customers each month. TrueCar,
Inc. is headquartered in Santa Monica,
California, and has offices in San
Francisco. The company was founded in 2005 and has been
profitable since 2009. TrueCar has driven over 200,000 sales and is
developing a suite of transaction oriented products and services
centered on transparency and radical clarity as a result of
comprehensively analyzing market data and information.
Safe Harbor for Forward-Looking and Cautionary Statements
Statements in this press release regarding benefits to
DealerTrack the pending sale of ALG, Inc. and the contemplated
commercial arrangements between DealerTrack and TrueCar, and all
other statements in this release other than the recitation of
historical facts are forward-looking statements (as defined in the
Private Securities Litigation Reform Act of 1995). These
statements involve a number of risks, uncertainties and other
factors that could cause actual results, performance or
achievements of DealerTrack to be materially different from any
future results, performance or achievements expressed or implied by
these forward-looking statements.
Factors that might cause such a difference include: economic
trends that affect the automotive retail industry or the indirect
automotive financing industry including the number of new and used
cars sold; reductions in auto dealerships; the impact of some
vendors of software products for automotive dealers making it more
difficult for DealerTrack's customers to use DealerTrack's
solutions and services; security breaches, interruptions, failures
and/or other errors involving DealerTrack's systems or networks;
the failure or inability to execute any element of DealerTrack's
business strategy; DealerTrack's success in expanding its customer
base and product and service offerings; and other risks listed in
DealerTrack's reports filed with the Securities and Exchange
Commission (SEC), including its most recent Annual Report on Form
10-K. These filings can be found on DealerTrack's website at
www.dealertrack.com and the SEC's website at www.sec.gov.
Forward-looking statements included herein speak only as of the
date hereof and DealerTrack disclaims any obligation to revise or
update such statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events or
circumstances, except as required by law.
TRAK-E
SOURCE DealerTrack Holdings, Inc.