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Autotrader.com is expected to announce the $500 million-plus acquisition of venerable Kelley Blue Book Co., the best-known provider of information about the value of new and used cars, The Wall Street Journal reported .
The deal will unite two closely held companies in an effort to create the leading player for car buyers using the Internet to research purchases. The companies garner at least 13 million unique visitors each a month, according to the companies.
AutoTrader.com acts as a middleman for car sellers and buyers, aggregating sales information from auto dealers and private sellers. Sellers can also advertise vehicles on the website.
Originally known for its blue-bound guides, Kelley Blue Book now does most of its business on the Internet, where it provides new and used vehicle information, including up-to-date resale values and what buyers are paying for new vehicles.
By combining, Autotrader's management hopes to garner more industry advertising dollars. More than 80% of car buyers shop online, but only 25% of auto-industry ad revenue is geared toward online, company officials said.
Buying Kelley Blue Book presents opportunity, and risks. Users prize the guide for its independence. To help mitigate those risks, Kelley Blue Book will operate as a subsidiary of AutoTrader.com and maintain its headquarters in Irvine, Calif. Kelley Blue Book President and CEO Paul Johnson, along with other executives, will remain at the firm.
As part of the deal, AutoTrader.com will also acquire Kelley Blue Book's sister companies CDMdata, which provides hardware and software for the auto industry, and CDM Dealer Services, which offers inventory-management software. The deal is expected to close by the end of the year.
Overall, Autotrader.com will continue to focus on the transaction side of auto sales, while Kelley Blue Book will be the information resource on vehicles.
"We can accelerate the ability of the Internet to be a more powerful shopping tool," said Chip Perry, Autotrader.com president and chief executive.
The deal will make Autotrader.com's classified listings available on the Kelley Blue Book website. A separate service that allows customers to receive offers for their used vehicles will also be made available on Kelley's site.
Kelley Blue Book also plans to capitalize on Autotrader.com's 900-member sales staff to help sell Kelley Blue Book products. Kelley Blue Book currently has less than 15 salespeople.
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