Cars.com is driving off from the company formerly known as Gannett before spinning off its newspaper division in 2015.
In an late Wednesday (5/3) announcement, TEGNA Inc. confirmed that its Board of Directors has approved of its previously announced spin-off of Cars.com.
This creates two publicly traded companies: TV station owner TEGNA and digital automotive marketplace Cars.com.
The spin-off will see a pro rata distribution of all outstanding shares of Cars.com to TEGNA stockholders of record at the close of business on May 18. Stockholders will receive one share of Cars.com for every three shares of TEGNA stock they own on the Record Date. Cars.com shares are expected to begin “regular way” trading on June 1.
The spin-off remains subject to the conditions described in the preliminary information statement filed by Cars.com on SEC Form 10, TEGNA said.
TEGNA HEAD TO RETIRE ONCE SPIN IS SET
Once TEGNA and Cars.com become two publicly traded companies, TEGNA President/CEO Gracia Martore will retire. So will TEGNA Digital President Jack Williams.
Commenting on the Cars.com spin-off, Martore said, “Today’s milestone brings us one step closer to creating two industry-leading companies with the right focus, resources and leadership to capture the unique opportunities in each of their rapidly evolving industries. This spin-off is the culmination of a multi-year transformation of our company, and the Board is confident that both companies are well positioned to execute their strategic plans for growth and create shareholder value.”
TEGNA President Dave Lougee will add CEO duties following Martore’s retirement.
“I am honored to lead TEGNA into the future at such a pivotal time for our company,” he said. “With our strong capital structure, we are well-positioned to take advantage of current and future regulatory changes. We will continue TEGNA’s history of serving our local communities by creating and distributing innovative and compelling content across a wide range of platforms and by providing our clients marketing tools and services to enable them to succeed in the digital age.”
Alex Vetter will serve as President/CEO of Cars.com upon completion of the separation.
TEGNA will continue to trade on the New York Stock Exchange under the ticker symbol TGNA.
Cars.com will trade on NYSE under the symbol CARS.
Prior to the separation, Cars.com will make a one-time cash distribution of $650 million to TEGNA. The company intends to use the tax-free distribution and cash flow from operations to reduce leverage. To that end, it will extinguish its current share repurchase program, with plans to reassess in the future.
TEGNA expects to pay a regular cash dividend of $0.28 per share annually, and it is expected that TEGNA’s existing credit facility will remain in place following the transaction, and the company expects to target long-term leverage levels in line with its peers.
Current TEGNA Board Chairman Marjorie Magner will continue to serve as chairman of TEGNA’s Board of Directors following the separation.
Greenhill & Co. is acting as financial advisor on the separation transaction.
Wachtell, Lipton, Rosen & Katz is acting as legal advisor.