Atlanta-based media conglomerate Cox Enterprises Inc. has bought back a stake in AutoTrader Group Inc in a deal that values the online auto marketplace at $7 billion. AutoTrader charges auto dealers to list vehicles and sells them software services.
According to Wall Street Journal, Cox sold a 25% stake in AutoTrader to private equity firm Providence Equity Partners LLC in 2010. Now Cox is buying it back for $1.8 billion, a source said. The sale, along with a $100 million dividend AutoTrader paid to Providence in 2012, will result in a return of about three times the $640 million Providence has invested in the company, the source added.
Cox owns the third-largest US cable company and several newspapers and radio stations. Though most of its revenue still comes from its cable unit, Cox Communications, automobile sales have become an increasingly important part of its empire, the report said.
Cox president and chief executive John Dyer said his company has brought Providence in to accelerate AutoTrader's growth and to leverage the firm's expertise in working with media and digital companies. Following AutoTrader's successful acquisitions over the past few years, Providence and Cox mutually agreed that this was the ideal time for the latter to have full ownership, Dyer added.
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