To Create Two Industry-Leading Companies With Scale Through Spin-Off Of Publishing Business To Gannett Shareholders; to acquire remaining 73% stake in Cars.com for $1.8B
Announced its plan to create two publicly traded companies with scale: 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.
Gannett believes the separation will result in material benefits to both companies, including:
- Creation of a stronger growth profile and a more competitive position for each company with enhanced management focus and resources more directly aligned with strategic priorities to drive innovation and value creation
- Optimization of capital structures based on the profitability, cash flow, and growth opportunities of each independent company
- Realization of more targeted investment opportunities for shareholders with trading valuations that more accurately reflect the distinctive characteristics of each business
- Opportunity to pursue value-enhancing acquisitions in each company with fewer regulatory obstacles
- Gannett expects the Publishing business will be virtually debt-free after the separation, with all of Gannett's existing debt retained by the Broadcasting and Digital company. Gannett anticipates the initial combined dividend of the two independent companies will not be less than Gannett's current $0.20 per share quarterly cash dividend.
Following the separation, Gannett's Broadcasting and Digital company, which has yet to be named, will remain headquartered in McLean, Virginia, and will trade on the NYSE. Gracia Martore will serve as Chief Executive Officer of the Broadcasting and Digital company at that time. Following the separation, the Publishing company, which will retain the Gannett name, is expected to be listed for trading on the NYSE and will remain headquartered in McLean, Virginia. Robert J. Dickey, currently president of Gannett's U.S. Community Publishing division, will become Chief Executive Officer of the Publishing company upon completion of the separation.
Cars.com
Gannett has also signed a definitive agreement to acquire full ownership of Cars.com, one of the leading digital companies in the automotive space. Under the agreement, Gannett will acquire the 73% interest it does not already own in Classified Ventures LLC, which owns Cars.com, for $1.8 billion in cash. The transaction is expected to contribute approximately $155 million in annual incremental 2014 pro forma EBITDA to Gannett, which includes the impact of the new affiliate agreements. The transaction price implies a multiple of 11.7x pro forma 2014 estimated incremental EBITDA. Based on the more favorable economics associated with the new affiliate agreements, as well as anticipated cost efficiencies, the company expects a pro forma 2015 estimated incremental EBITDA multiple of 9.2x. The company will maintain a strong balance sheet, with anticipated pro forma net leverage initially at approximately 2.8x, which will be reduced over time. 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.The acquisition of the remaining interest in Cars.com, which is subject to regulatory approval and other customary closing conditions, is expected to be completed in the fourth quarter of this year.
Tribune Publishing Company Announces Five-Year Affiliate Agreement with Cars.com
Announced that it expects to enter into a five-year agreement with Classified Ventures, LLC (CV) to extend its affiliate agreement with Cars.com. The agreement is contingent upon the closing of the sale of CV to Gannett Co., Inc. (NYSE: GCI) by the equity partners, which is expected to close by the end of 2014, subject to customary regulatory reviews. Upon the close of the sale, Tribune Publishing will enter into a five-year affiliate agreement with CV that will allow it to continue to sell Cars.com products and services exclusively in the eight key markets in which Tribune Publishing operates, including: Los Angeles; Chicago; Central- and South Florida; Baltimore; Hartford, Ct.; Allentown, Pa. and Newport News, Va.