Gannett To Separate Publishing Business; To Buy Out Cars.com

(RTTNews) - Gannett Co., Inc. (GCI), the parent company of USA Today, Tuesday said it plans to create two publicly traded companies with scale: one exclusively focused on its Broadcasting and Digital businesses, and the other on its Publishing business.

Gannett also signed a definitive agreement to acquire full ownership of Cars.com, a leading digital company in the automotive space. Under the agreement, Gannett will acquire the 73 percent interest it does not already own in Classified Ventures LLC, which owns Cars.com, for $1.8 billion in cash.

The stock gained close to 7 percent in pre-market activity.

Gracia Martore, president and CEO, said, "The bold actions we are announcing today are significant next steps in our ongoing initiatives to increase shareholder value by building scale, increasing cash flow, sharpening management focus, and strengthening all of our businesses to compete effectively in today's increasingly digital landscape."

The separation of the Publishing business will be implemented through a tax-free distribution of Publishing assets to shareholders.

According to the company, the transaction will create two focused companies with increased opportunities to grow organically across all businesses as well as pursue strategic acquisitions.

The two companies will be among the largest and strongest in their peer groups, with increased abilities to focus resources on the most promising areas of their businesses, Gracia Martore said.

Gannett also expects the separation to create opportunity to pursue value-enhancing acquisitions in each company with fewer regulatory obstacles.

The Publishing business is expected to be virtually debt-free after the separation, with all of Gannett's existing debt retained by the Broadcasting and Digital company.

Gannett expects the initial combined dividend of the two independent companies to be less than the company's current $0.20 per share quarterly cash dividend.

Following the separation, Gannett's Broadcasting and Digital company, which is 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.

The Broadcasting business, which includes 46 television stations Gannett owns or services, will be the largest independent station group of major network affiliates in the top 25 markets.

The Digital business will consist of several other well positioned and growing online companies in addition to Cars.com, with the largest being online job site CareerBuilder, majority owned by Gannett.

The Publishing company will retain the Gannett name and is expected to be listed for trading on the NYSE. The firm will remain headquartered in McLean, Virginia.

Robert 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.

Separately, McClatchy Co. (MNI) said that it, along with the remaining partners in Classified Ventures, LLC or CV, have entered into a definitive agreement to sell their entire stake in CV to Gannett for a price that values CV at $2.5 billion.

Graham Holdings Co. (GHC) also said in another statement that the company and its partners have entered into an agreement to sell their stake in CV to Gannett for a price that values CV at $2.5 billion.

Gannett currently owns a 27 percent share of CV, and Graham Holdings owns a 16.5 percent share, it added.

GCI, which closed up 4.4 percent at $34.32, gained 6.8 percent in pre-market activity.