LAKE SUCCESS, N.Y. -

DealerTrack announced late Monday that it is selling ALG to TrueCar. As part of the deal, DealerTrack will continue to have access to certain ALG intellectual property or data in its products and services, with a perpetual, royalty free license.

Interestingly, management of both companies describe the transaction as a tax-free reorganization. For the sale of its subsidiary, DealerTrack is receiving 15 percent equity interest in TrueCar and has the option to increase ownership interest to 19.9 percent in the future.

Automotive Lease Guide is a leading provider of residual value information, analytical data products, software solutions and consultation to the automotive industry. TrueCar’s mission is to simplify and clarify the car buying process for consumers by providing accurate market information via its site, which can help buyers make better, more informed decisions.

The sale is expected to close in the fourth quarter, subject to customary closing conditions and regulatory approval.

DealerTrack management said it expects to recognize a pre-tax gain for GAAP purposes of at least $40 million on the sale, but officials do not anticipate that this will have an impact on 2011 non-GAAP guidance.

ALG will be run independently of TrueCar’s operations, however, TrueCar management believes the data and expertise of this entity will “help accentuate” the company’s strength.

Mark O’Neil, chairman and chief executive officer of DealerTrack, said, “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, TrueCar CEO, added, “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 OEMs. 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 ALG business.”

Bernie Brenner, chief strategy officer of TrueCar, went on to say, “By working alongside ALG, we can achieve deeper and more meaningful partnerships with auto manufacturers. Through the transparency and effectiveness of TrueCar and ALG data we will create an efficient environment where the auto industry sells more cars and dealers can thrive in an ever-changing, competitive marketplace.”