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Aug. 5, 2014 /PRNewswire/ --
The McClatchy Company (NYSE-MNI)
said today that it, along with the remaining partners in Classified Ventures, LLC (CV), have entered into a definitive agreement to sell their entire stake in CV to Gannett Co., Inc. (NYSE-GCI) for a price that values CV at
$2.5 billion. The transaction is expected to close before the end of 2014, subject to normal regulatory reviews.
CV, whose primary asset is the online car shopping website Cars.com, is a joint venture among McClatchy, Gannett, Tribune Media Company, Graham Holdings Company and A. H. Belo Corporation. McClatchy owns 25.6% of CV.
CV was valued at
$2.5 billion for purposes of the transaction, which represents a multiple of 14.6 times 2014 EBITDA of
$171 million pro forma for the impact of the new affiliate agreements described below. Gross proceeds to selling partners are expected to be
$1.8 billion and McClatchy estimates its share of pre-tax, cash proceeds will be
$640 million. After-tax proceeds are anticipated to be approximately
$406 million. McClatchy expects to record a gain on the sale of its interest in CV in the quarter that the deal closes.
Upon closing of the transaction, McClatchy, Tribune Publishing Company,
The Washington Post and
A. H. Belo will enter into new, five-year affiliate agreements with Cars.com that will allow each company to continue to sell Cars.com products and services exclusively in their local markets. The affiliate agreements increase the wholesale rate at which the affiliates will purchase Cars.com products.
Commenting on the announcement,
Pat Talamantes, McClatchy's president and CEO, said, "Cars.com is a shining example of what the newspaper industry can accomplish working together. We joined forces and from scratch developed a highly successful internet company that has benefited consumers, auto advertisers, our individual companies and our shareholders. After 17 years, the time is right for an ownership change. We're happy to monetize a valuable digital asset and feel great that Gannett, our long-term partner in CV, will continue to innovate in order to grow the company and move it forward.
"This is a significant transaction for our company and its shareholders, and we are very pleased with how it came together. We received a great price that reflects the strength of the Cars.com franchise while maintaining the right to sell its products and services to our customers. This transaction will provide funding for the continuing digital transformation of McClatchy, including the ability to find other exciting digital investments. It will allow us to continue to pay down debt and will generate liquidity for other uses as determined by management and our board of directors."