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Carsales Warms Up to Drive on to the Market at $500m
Nick Tabakoff, The Australian

PBL Media's majority-owned online motoring website, Carsales.com.au, is set to float on the stock market in the last quarter of this year, in a deal analysts believe could value it at as much as $500 million.

The company's chairman and co-founder Wal Pisciotta told The Australian yesterday that the country's largest car-selling website was aiming towards a date for the float of October or later. "It'd be later in the second half."

Mr Pisciotta said the company needed to wait until a newly appointed finance boss "gets his feet under the desk" before proceeding with the float. "We've just appointed a new CFO - until he's in place, we can't attempt it," he said.

The objective of the float is to provide "a transparent and liquid trading platform" for Carsales shares. "We certainly don't need to raise funds - we're cash flow positive and paying healthy dividends," he said. "It's more of a compliance listing. There's little interest in diluting - I certainly don't want to and I know James (Packer) doesn't."

PBL Media is jointly owned by James Packer's Publishing and Broadcasting Ltd (PBL) and CVC Asia-Pacific. PBL's magazine arm, Australian Consolidated Press, launched a $1.21 a share takeover offer for Carsales, which valued the website at $270 million. The bid saw ACP buy out Fairfax's stake for around $18 million, in a move that helped PBL to a stake of just over 50 per cent in the website.

As part of one of last year's biggest media deals, ACP, the Nine Network and ninemsn were sold into PBL Media. As a direct result, PBL Media's half-owner, CVC, moved to a stake of more than 20 per cent of Carsales - a deal that had to be approved by Carsales shareholders. This shareholding change was easily passed at a meeting this year.

In the midst of the bidding process for Carsales, Mr Pisciotta has revealed he raised his own stake in Carsales above the 15 per cent mark with a $5.2 million purchase from another investor. "I'm not reluctant to be more integrated with PBL," he said.

He had also been buying PBL shares on the market.

Mr Pisciotta and his Carsales co-founders set up the company in the mid-1990s to give car dealers a stake in new media interests. The group has continued to grow since it became an unlisted public company in 2000.

Results on its website for the December 2006 half illustrate the company's growth potential if integrated into the cross-platform media opportunities of the PBL group of companies.

The company recorded a 123 per cent rise in profit before tax to $6.65 million, while earnings per share rose 60 per cent and revenue more than doubled to $21.3 million.

One analyst said last night that based on Carsales' own figures, the rapid rate of growth of its profits and the earnings multiples of other online classifieds such as Seek, a listing of the group could value the motoring website at in excess of $500 million by the time it floats later this year.

This would represent a substantial premium to the price paid by the PBL interests last year for its additional stake.