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Gannett to split into two publicly traded firms

Rochester Business Journal
August 5, 2014

Gannett Co. Inc., parent of the Democrat and Chronicle Media Group in Rochester and USA Today, announced a plan Tuesday to split into two publicly traded companies.

The Virginia-based Gannett separately plans to acquire Cars.com for $1.8 billion in cash.

The spin-off will allow one company to focus on broadcasting and digital properties and the other to be a publishing business with 81 local U.S. daily newspapers.

"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,” said Gracia Martore, president and CEO, in a statement. “Cars.com doubles our growing digital business, while our recent acquisitions of Belo and London Broadcasting doubled our broadcasting portfolio.”

The benefits of the divided companies are a better competitive position, optimization of capital structures, a stronger targeted investment approach, future opportunities for acquisitions and the elimination of the publishing business debts, officials said. All of Gannett's existing debt is to be retained by the broadcasting and digital company.

The broadcasting and digital segment—so far unnamed—is to remain based in McLean, Va., and trade on the New York Stock Exchange. Martore will serve as CEO. The company is to include 46 television stations owned or operated by the company. The digital business will consist of online companies such as CareerBuilder.com and Cars.com.

The publishing company also will be listed for trading on the NYSE. It will be led by CEO Robert Dickey, Gannett’s current president of its U.S. Community Publishing division. The company will remain based in in McLean, Va., and will keep the Gannett name.

Under the agreement for Cars.com, which is owned by Classified Ventures LLC, Gannett will acquire the shares--73 percent--it does not already own from Classified Ventures. The transaction is expected to close in Gannett’s fourth quarter.

Cars.com is the No. 2 auto-related site in the country with some 30 million visits a month, officials said.

Nixon Peabody LLP is legal adviser to Gannett on the purchase of Cars.com.

In mid-afternoon trading, Gannett shares (GCI: NYSE) were down more than 1 percent to $33.90 from Monday’s close of $34.32.

(c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.


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