Gannett Co. (GCI) on Tuesday said it will spin off its
publishing business, creating two separate publicly traded
companies, and confirmed it will buy full ownership of Cars.com for
$1.8 billion.
Gannett said it will spin off of its publishing arm to
shareholders, with the remaining company to focus entirely
Gannett's broadcasting and digital business. Gannett expects the
publishing business will be debt-free after the separation, as the
broadcasting and digital company will retain Gannett's existing
debt.
In addition, Gannett said it will buy the remaining 73% stake in
online ad-listings firm Cars.com that it doesn't own. The Wall
Street on Monday reported that the company was near a deal to take
full ownership of the Cars.com. News of the sale was earlier
reported by Bloomberg.
Gannett said it will fund the Cars.com deal with cash on hand,
borrowings under its revolving credit agreement and through bond
issuance of $650 million to $675 million.
The Cars.com business was put up for sale earlier this year,
with hopes of generating a sale price of as much as $3 billion. The
final deal values the site at $2.5 billion.
Cars.com is owned by the Classified Ventures publishers
consortium. Aside from Gannett, other investors include Dallas
Morning News publisher A.H. Belo Corp. (AHC); Miami Herald owner
McClatchy Co. (MNI); Graham Holdings Co. (GHC), the former owner of
the Washington Post; and Tribune Media Co. (TRBAA), which until
Monday was part of the same company as Los Angeles Times publisher
Tribune Publishing Co. (TPUB).
Classified Ventures was founded in 1997 as a way for newspaper
publishers to compete in the online auto and rental classifieds
businesses. Earlier this year, Classified Ventures agreed to sell
its other major holding, apartments.com, to CoStar Group Inc. for
$585 million.
One person familiar with Cars.com earlier this year estimated
that it generates about $400 million to $500 million in revenue a
year.
Write to Erin McCarthy at erin.mccarthy@wsj.com
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