Cars.com Inc. (CARS) Acquires D2C Media Inc

Cars.com Inc. (NYSE: CARS) (d/b/a "Cars Commerce" or the "Company"), an audience-driven technology company empowering the automotive industry, today announced the acquisition of D2C Media Inc. ("D2C"), a leading automotive technology and digital solutions provider in Canada. The Company paid CAD $105 million in cash (USD $76 million) at closing, which was funded by a combination of cash on hand and borrowings under the Company's existing revolving credit facility. There is also the potential for additional performance-based consideration of up to CAD $35 million (approximately USD $25 million as of the closing date) based on achievement of certain financial thresholds. The transaction closed on November 1, 2023.

Transaction Highlights

• Further expands the Company's geographic footprint; D2C serves 1,000 dealer customers in Canada today and will establish Cars Commerce as a leading automotive digital solutions provider in the country
• Supports acceleration of Cars Commerce's profitable growth trajectory and is expected to be immediately accretive
• Expected to create substantial cross-selling opportunities through rapid expansion of Canadian dealer base, expanding the potential for long-term Monthly Average Revenue Per Dealer ("ARPD") growth

D2C Media serves approximately 1,000 dealer customers throughout Canada with website, media services, and other technology solutions that help dealers increase sales velocity and measure impact. The company generates revenue primarily through subscription fees of its products and services. Historically, OEM program endorsement expansion has enabled incremental customer additions and profitable revenue growth for the company.

"The acquisition of D2C Media presents an exciting opportunity to expand Cars Commerce further across North America. With D2C Media's deep local relationships and established infrastructure, we will be able to tap into a new market with dozens of OEMs and thousands of retailers to fuel accelerated growth," said Alex Vetter, chief executive officer of Cars Commerce. "I'm thrilled to welcome the D2C Media team, and, together, we look forward to creating tremendous value for Canadian retailers through our ongoing commitment to enabling local automotive retail and simplifying everything about buying and selling cars."

As a result of the acquisition, Cars Commerce will materially expand from its existing base of approximately 250 Dealer Inspire Canadian website customers. In addition, with this acquisition Cars Commerce will now be endorsed by approximately 60% of OEMs operating in Canada, with significant runway for additional growth. The combination of D2C's local experience and knowledge with the Cars Commerce product portfolio will enable increased distribution for the Dealer Inspire and Accu-Trade brands in Canada; and deeper relationships with OEMs, many of whom seek complete coverage of North America.

Based in Montreal, D2C Media was founded in 2003 and has approximately 95 employees distributed throughout Canada. More information on the transaction will be provided on Cars Commerce's third quarter earnings call.

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