Gannett Agrees to $1.8 Billion Buyout of Cars.com SiteAlex Sherman
Gannett Co., the owner of USA Today, has agreed to buy out the other companies that own Cars.com for $1.8 billion, according to a person familiar with the matter.
Gannett already owns about 27 percent of the auto-sales website, so the deal values the whole business at about $2.5 billion, the person said, asking not to be identified discussing private information. An agreement could be announced as soon as today, the person said.
Jeremy Gaines, a spokesman for Gannett, declined to comment. A representative for Classified Ventures, the entity that owns Cars.com, couldn’t be reached for comment.
Cars.com, which was started in 1998, lets users check prices, compare models and read reviews of auto dealers. Classified Ventures is backed by four media companies in addition to Gannett: McClatchy Co., Tribune Media Co., AH Belo Corp. and Graham Holdings Co.
Gannett rose 4.4 percent to $34.32 yesterday, giving it a market value of about $7.7 billion. The shares advanced as much as 9 percent in after-hours trading. Shares of McClatchy gained as much as 21 percent to $5.50 in late trading, while AH Belo added about 3.8 percent. Tribune and Graham holdings were unchanged.
As part of the deal, the four owners other than Gannett will have five-year agreements with Cars.com in which they will continue to sell advertising in their respective regions, the person said. Those agreements will continue to provide profits to those companies, resulting in a lower valuation for the deal, the person said, from an inital target of about $3 billion.
Newspapers have steadily lost money and readership since hitting a sales peak in 2005. Classifieds advertising has been hardest hit, dropping by more than half between 2000 and 2008 to $9.9 billion, according to the Pew Research Center.
Now, seeking to capitalize on the market for online listings, newspaper companies are selling off businesses started while they were in better financial shape. Classified Ventures, the joint venture, sold another listings site, Apartments.com, for about $585 million this year.
The company was working with Moelis & Co. to find a buyer, a person familiar with the situation said in March.