Cox Enterprises on Wednesday said it has agreed to sell a 25% stake in AutoTrader.com to Providence Equity Partners. Per the deal, Cox is expected to maintain majority ownership and operating
control of the auto shopping subsidiary, while Providence's ownership will not gain any control over its day-to-day operations. Providence will, however, assume two seats on AutoTrader.com's Board of
Directors.
Rather than a setback for AutoTrader.com, the deal will accelerate its expansion through organic growth and acquisitions, according to Chip Perry, president and CEO of
AutoTrader.com.
"Their support will enable us to pursue the many organic growth opportunities, as well as strategic acquisitions, that will help improve the products and services we offer our
customers," Perry said of Providence.
Focused on the media, entertainment and communications sectors, Providence Equity has already invested in Hulu, and, in February, put $50 million into
Chinese search leader Baidu.
Headquartered in Atlanta, Ga., AutoTrader.com aggregates millions of new cars, used cars and certified pre-owned cars from thousands of auto dealers and private
sellers. Presently, it claims to attract over 15 million unique visitors per month.
Drawing attention to the value of its targeted audience, Auto Trader recently launched a trade media campaign
built around the tag line "We Work for You." Slated to run throughout the year, the campaign includes print ads in dealer-facing trade media, as well as online channels and daily email news blasts.
AutoTrader also recently kicked off its largest-ever integrated marketing campaign, which attempts to hammer home the idea that a successful search for a new or used vehicle takes both smarts and
resolve. A social-media element dubbed "Decide My Ride" is running on Facebook, where users are encouraged to pick four cars they are considering for purchase and then have their Facebook friends vote
on the one they should get.
About two years ago, Cox put Auto Trader up for sale, but recently took it off the market amid a worsening economic climate. Along with Cox, the venture capital firm
Kleiner Perkins Caufield & Byers is also an investor in AutoTrader.com.
Cox and Providence have signed a stock purchase agreement, and the transaction is expected to close as soon as all
necessary approvals have been obtained, the companies said Wednesday.