Boston, MA 08/06/2014 (wallstreetpr) – Global media and marketing solutions provider Gannett Co., Inc. (NYSE:GCI) announced that it was planning to spin off two publicly traded companies, with one focused on the publishing business and the other on broadcasting and digital businesses. The company is also buying online car destination Cars.com to accelerate growth of its digital portfolio.
Publishing To Be Separated
Gannett Co., Inc. (NYSE:GCI) had indicated that the publishing unit would be separated through the transfer of its assets to shareholders by a tax-free distribution while the other company would focus on its digital and broadcasting businesses. This is expected to allow the management of these two companies to focus for increased options to record uptick organically in all its businesses and also pursue tactical acquisitions.
Benefits of Separate Units
Gannett Co., Inc. (NYSE:GCI) expects the separated businesses to create a strong growth profile so as to be more competitive enough with increased resources and focus that are directly linked with tactical priorities to fuel value creation through innovation.
The move would also allow optimization of its capital structures depending on the profitability, growth prospects, and cash flow of both the companies. It will also realize a more targeted investment opportunity for the shareholders with the trading valuations indicating accurately the individuality of the two companies. These apart, it would also provide opportunities to the two companies’ management to scout for value-enhancing acquisitions without much hindrance from the regulators.
Publishing Unit To Be Debt-Free
Gannett Co., Inc. (NYSE:GCI) disclosed that it sees the publishing unit to be debt free completely once it is separated since all the current debt would be retained by another company, the Broadcasting and Digital company. Gannett expects that the two companies’ combined initial dividend would not be below the existing 20 cents a share of quarterly cash dividend.
Acquisition of Cars.com
Gannett indicated that it struck a definitive deal to buy the remaining 73% stake in cars.com for about $1.8 billion in cash. The acquisition would allow the company to fasten its digital transformation and focus on local media and marketing services.
