Weil Advises Providence on Cox Buy of AutoTrader Stake

, The Am Law Daily

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Atlanta-based media conglomerate Cox Enterprises has reached a deal to buy back a 25 percent stake in AutoTrader Group from Providence Equity Partners that the private equity firm bought in 2010.

Cox founded AutoTrader—an online marketplace that connects automobile buyers with dealers and private sellers—in 1997 as its majority owner. Cox, which sold Boston-based Providence a 25 percent stake in Atlanta-based AutoTrader for an undisclosed amount roughly four years ago, announced Friday that it has agreed to reacquire that stake. While financial terms of Friday's deal were not disclosed, The Wall Street Journal, citing an anonymous source, reports that Cox is paying Providence Equity Partners $1.8 billion—a sum that would value AutoTrader at roughly $7 billion all told.

With the purchase, Cox's stake in AutoTrader returns to 98 percent; the balance is owned by current and former AutoTrader employees.

The Journal also notes that a current spike in value for e-commerce companies generally has likely helped increase AutoTrader's valuation. Cox CEO John Dyer and Providence managing director Michael Dominguez both said in separate statements that AutoTrader has grown since Providence became an investor thanks to strategic acquisitions and the introduction of auto dealer software services. (Among those acquisitions: AutoTrader's 2010 purchase of car pricing source Kelley Blue Book in a deal worth between $500 million and $1 billion, according to our prior reporting.)

Friday's deal also comes about a year after Cox scrapped plans for AutoTrader's initial public offering, which was expected to raise up to $300 million but was called off with the company citing "prevailing market conditions."

Boston-based Weil, Gotshal & Manges private equity partner Kevin Sullivan is advising Providence on the sale of its AutoTrader stake. Sullivan previously advised Providence on its 2010 investment in AutoTrader and represented the private equity firm in connection with AutoTrader's purchase of Kelley Blue Book later that year. Weil subsequently advised Providence in connection with other AutoTrader acquisitions, including its 2010 purchase of online company HomeNet Automotive for an undisclosed amount. The firm also represented AutoTrader directly two years ago on its $58.5 million purchase of a 21.8 percent stake in Chinese online marketer Bitauto Holdings Limited.

Information about the outside legal advisers working with Cox and Autotrader on the matter was not immediately available.

As The Am Law Daily and sibling publication have previously reported, Cox was a longtime key Dow Lohnes client before cutting ties with the onetime Am Law 200 firm last year. That move, coupled with a series of notable lateral departures, led Dow Lohnes to seek a merger partner— a search that ultimately resulted in Cooley absorbing 54 lawyers from Dow Lohnes' Washington, D.C., headquarters in October.

Both Weil and Dow Lohnes had been advising AutoTrader on its planned IPO before that planned listing was abandoned last year. Dow Lohnes had also advised Cox and AutoTrader in connection with the 2010 share sale to Providence, as well as the acquisitions of Kelley Blue Book and HomeNet later that year. The firm represented Cox on numerous transactions related to the company's various newspaper and television holdings as well. A Cox spokesman told The Am Law Daily in October that he expected the company would continue to use former Dow Lohnes attorneys now at Cooley with respect to regulatory matters.

Former Dow Lohnes partner Peter Cassat serves as AutoTrader's general counsel.

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