Cox Enterprises Inc. will sell a 25 percent interest in its AutoTrader.com unit to Providence Equity Partners.
Cox will maintain majority ownership and operating control of AutoTrader.com, an online auto classifieds marketplace. Providence’s ownership will have no impact on day-to-day operations, but the private equity firm will get two seats on AutoTrader.com’s board of directors.
Chip Perry, AutoTrader.com president and chief executive officer, said the partnership with Providence Equity would help the online business pursue “many organic growth opportunities, as well as strategic acquisitions, that will help improve the products and services we offer.”
Cox said the deal gives it access to additional investment capital and expertise to help accelerate AutoTrader.com’s growth.
“This agreement demonstrates our commitment to AutoTrader.com’s continued success and will speed its future growth as the leader in the online auto space,” said Jimmy Hayes, president and CEO of Cox Enterprises, in a news release. “Providence Equity has a strong track record of working with communications, media and Internet companies to promote growth and encourage strategic expansion.”
Separately, AutoTrader.com reported it landed a financing arrangement with Goldman Sachs Lending Partners LLC and Wells Fargo Bank to provide $525million in senior secured revolving credit and term loan facilities. The facilities will be used to fund the redemption of certain shares of AutoTrader’s outstanding capital stock and for working capital and other general corporate purposes of the company.
What would a private equity firm want with 25% of AutoTrader.com?