MCLEAN, Va. — Gannett Co. has signed a definitive agreement to acquire full ownership of Cars.com for $1.8 million in cash. Under this agreement, Gannett will acquire the remaining 73% interest in the company from Classified Ventures LLC, which owns Cars.com.
The publishing company also announced plans to create two publicly traded companies: one exclusively focused on its broadcasting and digital businesses, and the other on its publishing business. The planned separation of the publishing business will be implemented through a tax-free distribution of Gannett’s Publishing assets to shareholders. The transaction will create two focused companies with increased opportunities to grow organically across all businesses as well as pursue strategic acquisitions, officials said.
“The bold actions we are announcing today are significant next steps in our ongoing initiatives to increase shareholder value by building scale, increasing cash flow, sharpening management focus, and strengthening all of our businesses to compete effectively in today’s increasingly digital landscape,” said Gracia Martore, president and CEO. “Cars.com doubles our growing digital business, while our recent acquisitions of Belo and London Broadcasting doubled our broadcasting portfolio. These acquisitions, combined with our successful initiatives over the past two and a half years to strengthen our publishing business, make this the right time for a separation into two market-leading companies.”
Cars.com is the No. 2 auto-related site, officials claimed, with approximately 30 million visits per month. Annual visits, according to officials, have grown at a rate of 17% for the last several years. Since its inception, Cars.com has grown consistently, and today the site displays approximately 4.3 million new and used cars from nearly 20,000 dealers.
Acquiring all of Cars.com further accelerates Gannett’s digital transformation and is consistent with the company’s focus on local media and marketing services. Gannett will enter into new five-year affiliate agreements with the existing owner-affiliates of Cars.com upon the closing date. The company expects the transaction to be accretive to free cash flow by approximately $0.43 per share and neutral to non-GAAP earnings per share in 2015, growing thereafter.
Gannett will finance the acquisition through cash on hand, the issuance of approximately $650-$675 million in new senior notes and borrowings under the company’s revolving credit agreement.