Web site could be worth $2.5 billion, insider says

Cars.com drawing interest from AutoTrader owners Cox, Apax, report says

Web site could be worth $2.5 billion, insider says

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Editor's note: Earlier versions of this story did not clearly explain AutoTrader's ownership. This version of Bloomberg's story clarifies the previous version.

NEW YORK (Bloomberg) -- Cox Enterprises Inc., the media holding company, and London-based buyout firm Apax Partners LLP, are interested in bidding for auto-sales Web site Cars.com, people with knowledge of the matter told Bloomberg.

The group of newspaper publishers that’s working with Moelis & Co. to explore a sale of Cars.com hasn’t formally solicited bids for the business yet, said the people, asking not to be identified because the information is private. The site, visited by more than 11 million potential car buyers a month, may fetch $2.5 billion in a sale, one of the people said.

Cars.com, which was started in 1998, lets user check prices, compare models and read reviews of auto dealers. The business would fit with assets that Cox Enterprises and Apax each already own. Apax is the majority owner of Trader Media Group, which operates AutoTrader in the U.K. That business is separate from the U.S. business of the same name controlled by Cox Enterprises.

A spokesman for Apax declined to comment on its interest in Cars.com. Elizabeth Olmstead, a spokeswoman for Cox Enterprises, said the company doesn’t comment on speculation. She added that the reports about Cars.com’s owners weighing a sale “confirms that the automotive services industry is an attractive, growing segment.”

A spokeswoman for Classified Ventures, the entity that owns Cars.com, didn’t respond to e-mail and phone messages seeking comment on the sale. Classified Ventures is backed by five newspaper publishers: Gannett Co., McClatchy Co., Tribune Co., AH Belo Corp. and Graham Holdings Co.

Relative value

At $2.5 billion, Cars.com would be valued at about 5 to 6 times annual sales of $400 million to $500 million, according to estimates from Bloomberg Industries.

Cox Enterprises this year bought a 25 percent stake in AutoTrader Group from Providence Equity Partners for about 6 times revenue, the data show. A person with knowledge of that deal said the stake was valued at about $1.8 billion, putting AutoTrader’s total value at about $7 billion.

Newspapers have steadily lost money and readership since hitting a sales peak in 2005. Classifieds advertising has been hardest hit, dropping by more than half between 2000 and 2008 to $9.9 billion, according to Pew Research.

Now, seeking to capitalize on the market for online listings, newspaper companies are selling off businesses started while they were in better financial shape. Classified Ventures, the joint venture, sold another listings site, Apartments.com, for about $585 million.

Moelis also advised Classified Ventures on its sale of Apartments.com for $585 million, according to a March 3 statement.

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