May 31, 2018 — A late report in the New York Post yesterday afternoon claiming Cars.com is for sale pushed the company’s stock up more than 4% in after hours trading. The only problem is, the story, which was picked up in numerous media outlets, likely isn’t true.
The story also reported the Cars.com had retained investment banker J.P. Morgan to lead the sale. Potential buyers include Cox Automotive and Apex Partners.
So why isn’t the report true?
First, earlier yesterday morning, Scott Forbes, chairman of Cars.com’s board of directors filed a Form 4 with the Securities Exchange Commission informing the street he had recently purchased more than $200 thousand in company shares. It would be highly unlikely he would have been able to make that purchase if Cars.com had retained a banker for a potential sale without announcing it first.
Second, the deal makes no sense for Cox Automotive, which owns both Autotrader and Kelley Blue Book, competitors to Cars.com. Such a deal does not fit with Cox’s current strategy. Even if did, it’s questionable an acquisition of Cars would survive a regulatory antitrust review.
Finally, our sources at Cars.com privately squashed the details of the story while speculating someone was trying to pump the stock. Cox, meanwhile, said it is not a buyer.