Pursuing acquisitions for growth
Gannett (GCI) said the publishing unit will be “virtually debt-free after the separation.” The existing debt will be retained by the broadcasting and digital company. The company said the separation will “create two focused companies with increased opportunities to grow organically across all businesses as well as pursue strategic acquisitions.” Such a separation could help Gannett “pursue value-enhancing acquisitions in each company with fewer regulatory obstacles.”
Cars.com acquisition enhances digital portfolio
Gannett’s acquisition of Belo Corp. in December 2013 boosted the number of its television stations. The company also announced the acquisition of a 73% stake in Classified Ventures in August last year. Classified Ventures owns Cars.com—one of the leading digital companies in the automotive space.
Classified Ventures was a joint venture between Tribune Media (TRCO), McClatchy (MNI), Gannett, Graham Holdings Company (GHC), and AH Belo Corporation (AHC). Gannett agreed to buy out its partners’ interests in Classified Ventures for $1.8 billion in cash. It agreed to acquire full ownership.
A release from Gannett said that Cars.com serves as the foundation for digital operations at many car dealerships across the US. It helps resolve digital marketing issues. It added that “acquiring full ownership of Cars.com doubles Gannett’s digital portfolio, further accelerates the company’s digital transformation and expands its leading position in local media and marketing services in the automotive sector – the largest and most important vertical for local marketing and advertising revenue.”
Rupert Murdoch’s News Corp. (NWSA) owns the Wall Street Journal and other publications. It has also been on an acquisition spree since it split from 21st Century Fox (FOXA) in 2013. News Corp. acquired romance novel publisher Harlequin Enterprises last year. It also forged deals for the property listings website Move, the United Kingdom luxury-shopping website Handpicked Companies, and the Irish social media news agency Storyful. Tribune Media Company (TRCO) spun off Tribune Publishing (TPUB). It acquired a chain of suburban newspapers last year.
Carl Icahn believes that after the split-off both of the publicly traded companies will comprise valuable assets. They could become acquisition targets. Therefore, he proposed certain actions related to corporate governance. We’ll discuss these actions in the next part of this series.