Gannett Co., Inc. (NYSE:CGI) agreed to acquire the remaining interest in Cars.com it does not already own for $1.8 billion in cash.

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Details of the acquisition

Classified Ventures LLC, a joint venture between Gannett Co., Inc. (NYSE:CGI) and four other companies – A.H. Belo Corporation (NYSE:AHC), Graham Holdings Co (NYSE:GHC), The McClatchy Company (NYSE:MNI) and Tribune Media Co (OTCMKTS:TRBAA) own Cars.com.

Gannett Co., Inc. (NYSE:CGI) owns 27% of Classified Ventures LLC. Under the acquisition agreement, Gannett will acquire the remaining 73% interest of  Classified Ventures LLC it does not already own. The deal would give Cars.com a valuation of $2.5 billion.

Gannett Co., Inc. (NYSE:CGI) will sign a new 5-year affiliate agreements with the existing owner-affiliates of Cars.com after the closing of the transaction.

The company will finance the acquisition through cash on hand, and it would issue approximately $650 million to $675 million in new senior notes and borrowings under its revolving credit agreement.

Acquisition accelerates Gannett’s digital transformation

According to Gannett Co., Inc. (NYSE:CGI), acquiring full ownership of Cars.com would further accelerate its digital transformation.

The company also emphasized that the acquisition is consistent with its focus on local media and marketing services. Gannett Co., Inc. (NYSE:CGI) explained that the automotive sector is the single largest and most important vertical for local advertising revenue.

Gracia Morte, president and CEO of Gannett Co., Inc. (NYSE:CGI) said, “Cars.com doubles our growing digital business while our recent acquisitions, Belo and London Broadcasting doubled our broadcasting portfolio.”

Gannett Co., Inc. (NYSE:CGI) expected the deal to contribute approximately $155 million in annual incremental 2014 pro forma EBITDA including the impact of the new affiliate agreements and anticipated cost efficiencies.

The company expected to achieve pro forma 2015 estimated incremental EBITDA multiple of 9.2x. Gannett Co., Inc. (NYSE:CGI) said its balance sheet would remain strong with anticipated pro forma net leverage at approximately 2.8x, which will be reduced over time.

About Cars.com

Cars.com is one of the leading websites for online car shoppers as it provides credible and easy-to-understand information from consumers and experts.

It has approximately 30 million visits per month and displays around 4.3 million new and used cars from almost 20,000 dealers. Cars.com allows consumer to search, compare and connect with sellers and dealers. It also provides car buyers more control over their shopping process.