MCLEAN, Va. — Cars.com is going public, the firm’s parent company, TEGNA Inc., announced on Wednesday. According to its announcement, the digital automotive marketplace will be spun off, creating two independent publicly traded companies.
TEGNA, which was called Gannett until it spun off its newspaper business last year, is the largest broadcast station group among major network affiliates in the Top 25 markets. And according to the company’s announcement, TEGNA is evaluating “strategic alternatives” for CareerBuilder. TEGNA owns a 53% controlling interest in the job search site. Minority owners include Tribune Media and The McClatchy Co.
The company also announced that President and CEO Gracia Martore, who is also a member of TEGNA’s board of directors, will retire upon closing of the spin-off. That’s expected to happen during the first half of 2017.
“Over the last four and a half years, we’ve taken a series of important strategic steps to increase the value of our business, including the acquisition of broadcast stations from Belo Corp. and London Broadcasting, the acquisition of full ownership of Cars.com, and the spin-off of Gannett publishing business,” Martore stated in the company’s press release. “The spin-off we’re announcing today is the next logical step in our ongoing transformation to best position our market-leading businesses and continues our strong track record of creating value for shareholders.”
Cars.com, which completed its acquisition of DealerRater in late July, will remain headquartered in Chicago once the spin-off is completed. It will trade under the ticker symbol “CARS.” Officials said the planned spin-off would result in a trading multiple for Cars.com “that is commensurate with other pure-play digital companies, greater flexibility to pursue merger and acquisition opportunities, and benefits associated with aligning capital structure and allocation with specific business needs and opportunities.
As an independent company, officials added, Cars.com will be able to “focus more sharply on its key strategic priorities,” which, according to the company, include rapid innovation and “active evaluation and pursuit of acquisitions to open up new, adjacent opportunities.”
TEGNA, which will remain headquartered in McLean, Va., will continue to trade on the New York Stock Exchange under the symbol “TGNA.” According to the company’s announcement, TEGNA’s management team will develop and present detailed separation plans to its board of directors over the coming months. Completion of the spin-off will be subject to certain conditions, including receipt of final board approval, receipt of an opinion from tax counsel regarding the tax-free nature of the distribution, and the effectiveness of a Form 10 registration statement. The latter is expected to be filed with the Securities and Exchange Commission later today, officials said.
According to the company’s announcement, the impending spin-off will allow TEGNA to focus on opportunities specific to its broadcasting business, which consists of 46 TV stations. They include the No. 1 NBC affiliate group, the No. 1 CBS affiliate group, and the No. 4 ABC affiliate group.
The company’s current debt, according to officials, will remain with TEGNA. However, TEGNA expects to receive from Cars.com a one-time cash dividend immediately prior to the spin-off. It will be used to maintain TEGNA’s current credit rating.
The completion of the spin-off will also mark the end of Martore’s 31-year career with TEGNA and its predecessor Gannett Co. Inc. Upon his retirement, according to the company’s announcement, Dave Lougee will assume the role of CEO and president of TEGNA, while Alex Vetter will maintain his role as president and CEO of Cars.com. The two executives will also serve on the boards of TEGNA and Cars.com.
Lougee currently serves as president of TEGNA Media. He was named president of Gannett Broadcasting in July 2007, and previously served as executive vice president of media operations for Belo Corp. Vetter was one of the original members of Cars.com’s management team. He is credited with helping to shape the company from its initial concept into a leading online automotive destination. In November 2014, Vetter was named CEO and president of Cars.com. The company currently employs 1,300 individuals and serves 20,000 retailers and every manufacturer.
“I am incredibly grateful to have spent more than 30 years servicing this outstanding organization and deeply honored to have had the opportunity to lead TEGNA during its inaugural year,” said Martore, who joined Gannett in 1985 as assistant treasurer. “… It has been an amazing ride, and both TEGNA and Gannett will always hold a special place in my heart.”
As for Cars.com, Martore added: “Spinning of Cars.com from TEGNA will establish two strong, industry-leading companies that are well positioned to compete and to continue to profitably grow in their targeted markets. Each business will have increased strategic, operating, and financial flexibility at a time when the broadcast and digital sectors are both rapidly evolving … Cars.com will have the flexibility to invest in further organic growth and to participate in the active digital automotive M&A market, and TEGNA will have a strong balance sheet and cash flow to continue to pursue investment in organic growth and opportunistic acquisitions and to provide an optimal mix of capital returns to shareholders.”
