GOING, GOING! Newspapers want to sell Cars.com for $3 billion
The cars.com online marketplace is up for sale. A group of newspaper publishers hopes to raise as much as $3 billion, cashing in on booming values for e-commerce sites, the Wall Street Journal says, quoting people" familiar with the plans".
Cars.com ... on the block
The Classified Ventures publishers consortium are being advised on the sale by Moelis & Co. Discussions have already begun with potential bidders, expected to include private-equity firms and strategic investors. One publishers could raise its stake or buy out the others, said the WSJ.
Gannett, which owns USA Today for instance, and owns around 27 per cent of Classified Ventures, has signaled that it could raise or sell its stake, depending on the price, said the Journal, quoting two people familiar with the company's thinking.
If a deal is struck, it effectively would unwind Classified Ventures, an online ad-listings firm. In addition to Gannett, the consortium's owners are Los Angeles Times publisher Tribune, Dallas Morning News publisher A.H. Belo Corp, Miami Herald owner McClatchy and Graham Holdings, the former owner of the Washington Post.
Classified Ventures last week said it planned to sell its other main property, apartments.com, to CoStar Group Inc. for $585 million.
The market for e-commerce sites has been heating up. In January, Providence Equity Partners sold a 25 per cent stake in the AutoTrader classifieds site to majority owner Cox Enterprises for $1.8 billion. Providence got three times its original investment in AutoTrader.
Shares of e-commerce companies such as Yelp and Priceline have soared over the past year, driven in part by the gradual shift of commerce to online venues.
AutoTrader, for example, has reported steadily increasing sales.
Started in 1997, Classified Ventures aimed to give its newspaper-publisher owners a "toehold in what was then a nascent market for online auto and rental classifieds," said the WSJ.
Cars.com attracts around 11 million car shoppers a month, according to its website. AutoTrader says it reaches 14 million car buyers monthly.
Tens of millions of dollars in annual dividends have gone to the newspaper owners - offsetting the industry-wide decline in newspaper print advertising.
Cars.com is said to generate around $400 million to $500 million in revenue a yea. But a new owner potentially could tap roughly an additional $200 million annually.
That revenue currently is distributed directly to the owners separate from the dividends they receive, through sales agreements that allow their newspapers to handle ad sales on behalf of Cars.com in many local markets.
Write to William Launder at william.launder@wsj.com, Dana Mattioli at dana.mattioli@wsj.com and Mike Spector at mike.spector@wsj.com.