On May 3, TEGNA (NYSE: TGNA) confirmed its Board of Directors had approved the impending spin-off of Cars.com. The action will effectively create two publicly traded companies with stockholders of TEGNA receiving shares in the new Cars.com company. The spin-off will take the form of a pro rata distribution of outstanding shares of Cars.com TEGNA shareholders as of May 18, 2017. Current TEGNA shareholders will maintain their TEGNA shares, while simultaneously receiving a single Cars.com share for each 3 shares of TEGNA stock owned at the time of the record date. The spin-off is still subject to certain conditions.

Upon the spin-off, current President and CEO of TEGNA, Gracia Martore, is expected to retire. Dave Lougee will take over his post. Alex Vetter will serve as CEO and President of Cars.com. It has been announced that Cars.com shares will begin trading regularly on June the 1st of 2017. Once the separation is completed, TEGNA will continue trading on the NYSE under the TGNA stick. Cars.com will also trade on the NYSE under the symbol CARS. TEGNA shareholders who sell their TGNA shares on or before May the 31st will lose their right to receive shares of Car.com stock.

Before the separation, Cars.com is expected to make a one-time cash distribution of 650 million dollars to TEGNA. The new company will also enter into new credit facilities with borrowing capacities of around 900 million dollars. It will invest in several organic growth initiatives, as well as strategic acquisitions to create value for stockholders. Cars.com does not intend to pay a cash dividend. After the separation, TEGNA expects its existing credit facility will remain. It also intends to target long-term leverage levels in line with the company’s peers. The 650 million dollar tax-free distribution from Cars.com will be used in correlation with cash flow from operations to decrease leverage.

The company’s share repurchase program will be extinguished with plans to reexamine it in the future. Finally, TEGNA intends to pay a dividend of $0.28 annually to their shareholders. Additional details can be found here.

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