Tegna (NYSE: TGNA) is planning to spin off its digital automotive marketplace business. The biggest asset within this segment is cars.com, which will be the name of the company also. The spin-off is planned to be a tax-free distribution of shares. The distribution ratio and record date are yet to be determined, though management plans on completing this event during the first half of 2017. The parent company has hindered revenue and earnings growth. The past year hasn't been good for TGNA shareholders and management is hoping the spin-off will extract value through bringing cars.com to the forefront.
Overview
Cars.com is a leading online research destination for consumers interested in purchasing their next vehicle. The site gets 35 million visitors monthly and now 50% come from mobile. Cars.com hopes to make purchasing a car easier. Consumers are able to access information like make, model and year for the vehicles they are interested in and find contenders in a quick manner. The site has up to 4.5 million cars listed on its site at any given time and services 20,000 customers, which are car dealerships and large franchises. The majority of the revenue is generated from online subscription advertising products. Also, another revenue source is the sale of display advertising to national advertisers.
