Gannett plans to divide the company into two publicly traded entities: One focused on broadcasting and digital, the other on publishing; the latter through a tax-free distribution of assets to shareholders.
Gannett has also agreed to acquire the 73% interest in Cars.com that it does not already own from Classified Ventures LLC for $1.8 billion in cash.
“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. “Cars.com doubles our growing digital business, while our recent acquisitions of Belo and London Broadcasting doubled our broadcasting portfolio. These acquisitions, combined with our successful initiatives over the past 2 1/2 years to strengthen our Publishing business, make this the right time for a separation into two market-leading companies.”
Gannett said the split will increase opportunities “to pursue value-enhancing acquisitions” in each company, with fewer regulatory obstacles.
“Gannett has made huge strides in strengthening each of its businesses over the past few years, and the Board believes that the creation of two highly focused companies with enhanced financial and regulatory flexibility will accelerate growth and create additional value for our shareholders,” said Marge Magner, chairman of the board.
In recent days, Scripps and Journal Communications announced a merger, and a combining of broadcast and print assets into separate companies, and Tribune announced a spinoff of its newspaper division.
Gannett expects the publishing business will be virtually debt-free after the separation, with existing debt retained by the broadcasting and digital company.
Following the separation the broadcasting and digital company, as yet unnamed, will remain headquartered in McLean, Virginia, and will trade on the NYSE. Gracia Martore will be CEO.
The publishing company will retain the Gannett name and will remain headquartered in McLean. Robert J. Dickey, president of Gannett’s U.S. Community Publishing division, will become CEO.