Cox Enterprises has increased its stake in AutoTrader Group, giving the Atlanta media company ownership of 98 percent of the online auto marketplace it started 15 years ago.
The purchase of a 25 percent stake that Providence Equity Partners bought from Cox Enterprises three years ago is set to close Friday. Cox and the Rhode Island-based private equity firm did not disclose the terms of the transaction.
Cox Enterprises, which also owns The Atlanta Journal-Constitution, said it expects to continue expanding AutoTrader as part of its portfolio of software, advertising, online information and auction businesses focused on auto dealers and buyers.
“It is an area that we intend to continue to make investments,” said Cox Enterprises CEO John Dyer. “It’s a really dynamic business. … It’s grown very nicely.”
Dyer, formerly Cox Enterprises’ chief operating officer, became president and CEO on Wednesday. He replaces former CEO Jimmy Hayes, who retired.
Cox’s auto-related businesses include Kelley Blue Book, a publisher of auto value information that AutoTrader bought in 2010, and auto auction service Manheim Inc. The auto-related businesses account for about a quarter of privately-held Cox’s more than $15 billion in revenue.
Cox’s deal this week closed the chapter on a partnership with private investment firms in which AutoTrader rapidly expanded in recent years and the partners flirted with taking the company public by selling stock stock in an initial public offering.
“We are extremely gratified to have partnered with Cox and the AutoTrader team,” Michael Dominguez, managing director of Providence, said in a news release.
Last year, Cox also bought a 5 percent stake in AutoTrader that Menlo Park, Calif.-based private equity firm Kleiner Perkins Caufield & Byers had owned for several years. The remaining 2 percent of AutoTrader is held by current and former employees.
Months after Providence Equity bought its stake in 2010, Atlanta-based AutoTrader bought Kelley Blue Book. It then added several other businesses serving auto dealers and buyers, including vAuto, Vin Solutions, Haystack and HomeNet Automotive. Partly as a result, AutoTrader’s revenue increased roughly 60 percent from 2010 to 2012 to reach $1.2 billion. It has 3,565 employees.
In 2012, AutoTrader’s owners considered taking the company public, filing papers to raise up to $300 million in an IPO. But the company withdrew its registration for the planned stock offering early last year, citing “prevailing market conditions.”
“We considered the IPO as a vehicle to catapult AutoTrader’s growth,” said Dyer, but decided it wasn’t necessary, given the firm’s continued expansion through acquisitions and internal growth. “We would prefer to own it all.”
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