To expand its business in the auto industry, Automatic Data Processing is buying Seattle technology company Cobalt in a cash deal worth $400 million.

To expand its business in the auto industry, Automatic Data Processing is buying Seattle technology company Cobalt in a cash deal worth $400 million.

ADP, a publicly traded company based in Roseland, N.J., made the announcement Friday. The outsourcing company, which handles services such as payroll and human resources for clients, will add Cobalt’s products to what it already offers the auto industry.

Cobalt, a privately held company, provides digital marketing services to automakers and dealers. The company helps car dealers and makers reach customers online, including building websites, running search and display-ad campaigns online, and handling e-mail marketing.

It also operates a division called Dealix, which runs the website www.usedcars.com.

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About 1,000 people work at Cobalt, 750 of them in the Puget Sound region.

John Holt, chief executive officer of Cobalt, said the Seattle operation would continue to grow.

“This is all about growth. Digital marketing in automotive is still in the early stages, and we can grow share and deepen our relationships at existing customers,” he said by e-mail.

“There are going to be some cost overlaps, but they’re not driving the transaction.”

Holt said Cobalt will continue to recruit for jobs in Seattle.

He added in the note that he will lead digital marketing for ADP’s dealer services, and the current Cobalt management would remain.

“Our goal is to understand how a dollar spent on advertising turns into a dollar earned for our OEM [manufacturers] and dealer customers,” Holt said in his note.

“We’re in the third inning of a nine inning game proving this, so there’s lots of good work ahead.”

He expects the transaction to close in the third quarter of this calendar year.

ADP will keep the Cobalt and Dealix brand names.

Holt co-founded Cobalt in 1995 by building websites and software for auto dealers.

The company went public in 1999, then private again in 2001.

It last raised $47 million in venture funding in 2004.

ADP will hold a conference call for analysts at 1 p.m. Monday to discuss the financial impact of the merger.

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com