Filed by Autoweb.com, Inc.
(Commission File No. 000-25577)
Pursuant to Rule 425 under the
Securities Act of 1933 and deemed
filed pursuant to Rule 14a-12 of
the Securities Exchange Act of 1934
Subject Company:autobytel.com inc
Commission File No. 000-22239
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AUTOBYTEL AND AUTOWEB CONFERENCE CALL SCRIPT
APRIL 11, 2001 1:30 PM PT
HOST MELANIE:
Thank you for joining us today to discuss today's announcement. Your hosts
today are Mark Lorimer, President and CEO of Autobytel.com, and Jeffrey
Schwartz, President and CEO of AUTOWEB.COM. Today's conference call, including
the question and answer period or projections or other forward-looking
statements regarding future events and the future financial performance of the
company, including statements about projected revenues and expense savings or
about synergies, are covered by the Safe Harbor Statement contained in today's
press release.
We would like to caution you that actual events or results may differ materially
from those forward looking statements. We refer you to documents the companies
have filed with the SEC, specifically Form 10-K for the year ended December 31,
2000 and quarterly reports on Form 10-Q. These documents identify the principal
factors that could cause results to differ materially from those forward looking
statements.
Autobytel.com plans to file a registration statement on SEC Form S-4 in
connection with the proposed transaction and Autobytel.com and Autoweb.com
expect to mail a joint proxy statement/prospectus to their respective
stockholders containing information about the transaction. Investors and
stockholders are advised to read the joint proxy statement/ prospectus regarding
the potential transaction when it becomes available because it will contain
important information. After the joint proxy statement/prospectus is filed with
the SEC, it will be available free of charge on the SEC website at www.sec.gov
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and from Autobytel.com and Autoweb.com through their respective investor
relations departments. In addition, copies of all other reports, proxy
statements and other information filed by the companies with the SEC are
available from the Commission at its website and from the respective companies.
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For detailed risks related to the proposed transaction, please refer to the news
release issued today, the Form S-4 to be filed by Autobytel.com with the SEC,
and the joint proxy statement/prospectus which will be included in the Form S-4
mailed by both companies to their respective stockholders when it becomes
available.
And now at this time I would like to turn the call over to Mark Lorimer,
President and CEO, Autobytel.com.
MARK LORIMER:
First, I'd like to welcome all of you and thank you for joining us on such short
notice.
As you know, we're here to discuss the announcement we made today that
Autobytel.com and Autoweb have signed an agreement to combine the two companies.
We wish to take you through a few points about the structure of the deal, the
strategic reasons for the deal, the financial picture the deal creates and the
synergies the deal is expected to give us. Then we will open the call to your
questions.
I'll start with the deal structure. This is an acquisition by merger. As part
of the transaction, Autobytel.com is expected to issue approximately 10.5
million shares of its common stock in a tax-free exchange for all of the issued
and outstanding shares of Autoweb.com. Autoweb.com stockholders will receive
0.3553 shares of Autobytel.com common stock for each share of Autoweb.com common
stock they own.
When the transaction is concluded, approximately 34% of Autobytel.com's common
stock is expected to be owned by the former Autoweb.com stockholders. Upon
closing of the deal, we will change the name of the company to Autobytel, Inc.
We are making the name change to reflect not only the ever-increasing focus we
are putting on providing technology, management and data services, but also, our
ownership of multiple marketing service providers, including Autobytel.com,
Autoweb.com, CarSmart.com, Autosite.com and Dealersites.
The combined company will trade under the existing ABTL ticker symbol.
Strategic Reasons:
Lets now turn to the strategic reasons for the deal. There are two questions
I'd like to answer - WhyAutoweb.com??? and Why Now???
Why combine Autobytel.com and Autoweb.com?
1. We expect this transaction to exploit the strengths of two companies already
in leadership positions in the space. As you know, Autobytel and Autoweb
both have strong brands, strong dealer bases, extensive consumer bases and
strong relationships with global manufacturers. In addition, Autoweb's AIC,
one of the top providers of US information to the OEM market, and Autoweb's
strong relationships with leading
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web portals and key affiliates should also help drive the combined company
to become the industry standard for online automotive research.
2. The depth and strength of the combined companies' customer base should
translate into expanded opportunities for revenue generation:
The new company is expected to have
over 7,000 dealers increasing revenue opportunities both in program fees
and in the suite of dealer service products we offer;
revenue generating relationships with 24 of the 26 major manufacturers.
And well over two million unique site visitors a month
3. Combining the business also makes sense from a financial perspective. We
expect significant revenue synergies to materialize next year. We have
already identified what we believe will be large expense savings. One of the
many great things about this deal is that our two companies do many of the
same things, and in those areas, great expense savings can be found. At the
same time, there are complementary business segments, such as AIC, that we
plan to leverage to the benefit of the combined company. These segments are
expected to drive greater sales volume to each of our large dealer-customer
bases.
4. Last, but by no means least, are the further financial benefits of this
deal:
Incremental revenues are expected to be more than incremental expenses. We
expect the combined company to generate revenue in excess of $100 million
annually. We believe that there is long-term growth potential as the
referral model is emerging as a clear leader in the automotive buying space
, on-line buying is expected to grow and manufacturers are showing
dedication to e-commerce initiatives. We expect significant growth
opportunity in this spaces. We expect to continue to maintain an ample cash
position to reach the point of profitability.
And, perhaps most importantly, as we mentioned in our last conference call
in January, Autobytel, on a standalone basis, expects to be profitable in
the third quarter. Depending on the timing of the close of the transaction,
we believe the combined company will also be profitable on an operating
basis, excluding one time merger costs, in the third quarter of 2001.
We expect to generate substantial synergies from the transaction. Together,
we can enhance revenue opportunities from our extensive combined
manufacturer and dealer relationships. We expect to achieve cost savings
from eliminating redundancies such as duplicative public company costs.
In summary, stockholders should benefit from our abilities to both exact savings
from eliminating the duplicative costs between the two companies and increase
the revenue opportunities generated from our combined strengths. Consumers
should benefit from the additional resources we will have at our fingertips to
further develop our award-winning consumer initiatives and programs.
Importantly, our dealer and manufacturer partners should benefit from our
ability to send them millions of car buyers as well as to provide additional
marketing, management and content services.
Bottom line: We believe this transaction has the potential to create the
largest platform of retailers and customers in the online automotive market.
Why now???
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The time to do this deal was now, for three primary reasons. The reasons are:
one -- the pricing dynamics were right, two -- anticipated expense savings that
we believe can be realized, without changing our timeline to achieve
profitability, and three --the dynamics in the online car market.
As for pricing dynamics: As we all know, the market has not been kind to
technology, dotcoms, or autodotcoms in the past year. While this has had a very
adverse impact on both of our shareholder values, we believe this combination
and its potential impact on the online automotive market should serve to unlock
shareholder value for the shareholders of the combined entity.
As for the expense savings: We all know two things - one: more companies die of
indigestion than starvation, and two: we can't do anything that would
compromise our third quarter profitability projections. In order to meet those
challenges, during our discussions and negotiations, we both concluded early
that our first order of business should be a quick and efficient integration.
Today we believe we present a deal that makes sound strategic and financial
sense. We believe we will achieve profitability by the third quarter of 2001.
As for the current dynamics in the online car industry: the days of daily
entrants into the online car space are over. As it turns out, the pundits who
said there were no barriers to entry were wrong. Brand, dealer networks,
technology tools, and industry knowledge are all, in and of themselves,
important barriers. But taken together, we believe the position is very
difficult to replicate. The consolidation among the online players has been
ongoing amongst the "soon to run out of money" crowd. While this is obvious,
what is less obvious is that the players who were once thought of as permanent
members of the online club are reassessing the space. We see some competitors
close their direct offerings, and some that do deals that send all of their
purchase requests to one dealer group. While this may be an effective strategy
for them, it also seems to signal that the dealer relationships, the
monetization of the traffic, and the industry knowledge were all barriers they
chose not to scale.
We also see the car manufacturers rethinking their positions towards online car
services. They are moving to a philosophy that acknowledges the consumer
preference to deal with third party buying services, and a focus on how to work
with the services as opposed to against them. This trend should continue and
accelerate. As I have said before, the car business has a history of rejecting
at first, and then embracing new ways to do business. If you want proof for
this statement, you only need look as far back as auto leasing. Auto leasing
entered the market in the `60s, only to be soundly derided as something that
would never take off in the car business. Carmakers and retailers completely
rejected the notion of leasing - yet today, in some brand lines and in some
demographics, leasing makes up a majority of the new car financing vehicles. If
you wonder whether the manufacturers will ever fully adopt third party companies
providing Internet services, we need only to show you our GM Pilot in Washington
D.C., or any of AIC's 22 manufacturer relationships.
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But the car business is big, and it needs big players. When a company like GM
seeks a partner, they need one that can provide the tools and services they need
on a vast scale. Upon the completion of this transaction, we believe that we
are well positioned to meet the large challenges posed by the large
opportunities to provide services to the OEMs.
Autobytel, Inc. with its multiple brands and expanded platform for OEMs, dealers
and consumers should be well positioned to meet the growing Internet needs of
the trillion dollar global automotive industry. And we firmly believe that this
transaction has the potential to create the only global company of any scale
that is able to provide a broad range of marketing, management and content
services to help automotive retailers and manufacturers meet the challenges and
opportunities presented by e-commerce.
With that, I'd like to turn the floor over to Jeffrey Schwartz, CEO of
Autoweb.com and future Vice Chairman of Autobytel, Inc.
During the course of this process, we have met many people that we are very
excited to have the opportunity to work with in the future. I am extremely
excited about Jeffrey Schwartz joining our executive management team. As a key
leader in Autobytel, Inc., Jeffrey's first order of business will be to lead the
integration efforts. We believe Jeffrey clearly has the experience to bring us
forward successfully as a combined entity, realizing the synergies that this
deal offers while preserving the strong Autoweb.com brand position, as well as
dealer and industry relationships. Jeffrey-
JEFFREY SCHWARTZ
Thanks, Mark.
I'm also very excited about what the future brings.
We believe the combined company will become the industry standard for consumers,
dealers and manufacturers alike. Our combined strengths should give us the
ability to further penetrate the automotive industry and become a powerful
entity in the global automotive market.
Among Autoweb.com's greatest strengths is our content syndication division. We
have very significant relationships with the web's leading portals and key
affiliates, which make us one of the leading automotive "powered-by" brands."
Combined with the power of Autobytel.com's brand and Carsmart.com's extensive
portal agreements, Autobytel, Inc. should have one of the largest audiences of
online automotive shoppers.
In addition, we have developed advertising and marketing relationships with 22
of the 26 major OEM's, data, content, and technology relationship with more than
20 OEM's, and fulfillment relationships with thousands of partners, including
OEM's and large dealer groups such as Auto Nation. Our progress in these areas
will clearly strengthen Autobytel, Inc.'s position in the key marketing,
content, and fulfillment segments and should improve the operating results of
the company in the future.
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We have been consistently pleased with our division, AIC, which we believe to be
the best there is in the automotive data business. Currently, AIC provides data,
content, or technology to General Motors, Ford, DaimlerChrysler, Toyota, and
Honda, among others. AIC data, content, or technology also power the top four
destinations on the web, including AOL, Yahoo, Lycos, and MSN.
During the last several months, we have made substantial progress in cost-
cutting and efficiency initiatives to accelerate our profitability goal. This
deal, combined with substantial expenditure reductions in our portal agreements,
is expected to enable us to realize immediate integration synergies on both the
revenue and expense sides of our new company. We anticipate that the recent
restructuring of marketing agreements with our portal partners will reduce
future obligations through 2003 by $40 million. For Q2 through Q4 2001, these
year over year expenses are expected to be reduced by $15 million.
As we move forward with the plans for integration, as Mark mentioned, we will
be working hard to realize synergies between the companies to create expense
savings and eliminate redundancies in all of the operating units. And, as Mark
pointed out, we believe those opportunities are significant. We are firmly
committed to the realization of Autobytel, Inc.'s profitability target in Q3
2001.
It is no secret that for six years, our two companies have been engaged in hand
to hand combat. When we first started talking about this deal, we believed that
victory in this space was on the other side of a combination of our two
companies. As Mark pointed out earlier, we believe the synergies between us are
clear to everyone and we make a natural team. Now, we have a remarkable
opportunity to fuse our strengths and yield value for our stockholders.
It is my firm belief that the combined company, Autobytel, Inc. and its brands
including Autoweb.com, CarSmart.com and AutoSite.com represent a winning
combination that promises to shape the future of online automotive commerce.
With that, I turn it back to Mark.
ML: Thanks, Jeffrey. Now, we'd be happy to take your questions.
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