AutoTrader.com has agreed to buy the venerable Kelley Blue Book automobile pricing enterprise for an undisclosed amount, the companies said Tuesday.
Kelley Blue Book will operate as a subsidiary of AutoTrader and continue to be headquartered in Irvine, Calif., the parties said. The deal, expected to close by year's end, came as little surprise to those who have been eyeing a possible sale. Last month, news reports suggested that AutoTrader was the lead bidder to acquire Kelley.
Though terms of the deal weren't disclosed, bankers involved in the deal previously estimated the value of the Kelley franchise at $500 million to $1 billion.
AutoTrader.com, a 12-year-old supplier of consumer information based in Atlanta, said it will maintain Kelley Blue Book's reputation for providing independent and unbiased information for the automotive marketplace. That includes retaining Kelley's current management team, led by President and CEO Paul Johnson.
"Becoming part of the AutoTrader.com family of companies will help us accelerate our growth in the vehicle valuation and consumer car shopping spaces," Johnson said in a statement.
"The Internet has become a primary marketing channel for auto dealers and manufacturers to reach and influence consumers during the vehicle purchase process," said AutoTrader President and CEO Chip Perry. The two companies are well-positioned in the competitive online pricing information industry to help improve efficiency and profitability among both dealers and manufacturers during the next decade, he said.
Kelley Blue Book got its start in 1926, when Los Angeles car dealer Les Kelley published the first Blue Book of Motor Car Values based on data he had gathered since 1918, according to the company's website, kbb.com. Kelley used the phrase "blue book" after the Social Register, a directory of the names and addresses of prominent American families, because the volume contained valuable information.
The business eventually was handed down to Kelley's grandson and great-grandson, both of whom retired in 2000. No Kelleys currently serve on the company's executive management team.
The Financial Times reported last month the reasons for the sale are believed to be related to the hike in the capital gains tax rate to 20% from 15% that takes effect next year, as well as decreased traffic to the kbb.com website.