Cars.com hires JPMorgan to explore possible sale
Cars.com has hired JPMorgan Chase to explore strategic options including a possible sale of the company, The Post has learned.
The online car retailer earlier this month added two directors to its 11-member board that were nominated by activist investor Starboard Capital.
With the activist firm headed by Jeff Smith in the boardroom, it looks unlikely this assignment is for anything but a sale, a source following the situation said.
“Hiring a banker means they think they can get $40 a share as that is what they want to sell for,” the source said.
Cars.com shares on Wednesday were recently trading at $25.19, up 3 percent.
Cars.com didn’t immediately respond to a request for comment.
Possible suitors include buyout firm Apax Partners and Atlanta-based cable TV company Cox Communications, which reportedly kicked the tires on the company two years ago before it went public.
Publishing giant Hearst, which owns Popular Mechanics, last month told trade publication DealReporter it might have interest in Cars.com if it were for sale. Cars.com says it attracts 19.4 million unique monthly visitors.
Another large private equity firm too has recently started doing diligence on the $1.8 billion market cap company in case it came up for sale, the source following the situation said.
Cars.com shares got hit earlier this month when Facebook announced it was expanding its auto marketplace into Canada and the UK, following a recent announcement it was doing the same in the US.
Overall, Cars.com has been essentially flat since spinning off from local TV broadcaster Tegna last June at $25.34.
Cars.com’s revenue-sharing partnerships with publishers including Gannett will be running out in a few years. Cars.com then can keep more of the profits from the auto dealerships that pay to advertise on the site, according to sources.