Gannett Co tables $815 mn unsolicited bid for Tribune Publishing Co
26 April 2016
Gannett Co Inc, the largest US newspaper publisher, yesterday tabled an unsolicited $815 million, including debt, buyout offer for Tribune Publishing Co.
Gannett yesterday disclosed that it had on 12 April offered to pay $12.25 in cash per Tribune share, a premium of about 63 per cent to Tribune Publishing's Friday closing price of $7.52, and a 58 per cent premium to the volume weighted average trading price over the past 90 days.
The buyout offer includes the assumption of $390 million of debt as well as other liabilities.
Tribune Publishing, which was spun off from media company Tribune Co in 2014 (See: Tribune to split broadcasting and publishing into two companies), has been struggling with print ad sales falling. The Chicago-based company reported a net loss of $2.8 million in 2015, from a profit of $42.3 million a year earlier.
In February, US businessman Michael Ferro, owner of the Chicago Sun-Times, took over as chairman of Tribune Publishing by acquiring a 16.6- per cent stake for $44.4 million.
Soon after he managed to persuade the board to sack Tribune's chief executive Jack Griffin, and replace him with Justin Dearborn, a former health-care technology executive with no experience in media.
Explaining why Gannett is going public with its offer, Gannett said in a letter to Tribune Publishing that although it had held talks for two weeks, Tribune Publishing has so far refused to engage in ''constructive discussions.''
Tribune Publishing yesterday responded that it would hire financial and legal advisers to review the offer and its "numerous contingencies."
Analysts opine that Tribune Publishing is taking too much time in hiring advisers, and that Ferro does not want to sell because he wants to control the company although he now has seven new people on the board who do not know the publishing business.
John Jeffry Louis, chairman of Gannett, said, ''The Gannett Board unanimously believes that the acquisition of Tribune would deliver substantial strategic and financial benefits for the combined company, and we are pleased to offer Tribune stockholders a significant and compelling premium and immediate cash value for their investment.''
Tribune Publishing is a diversified media company with a diverse portfolio of news and information brands that include 11 award-winning major daily titles, more than 60 digital properties and more than 180 verticals in markets, including Los Angeles; San Diego; Chicago; South Florida; Orlando; Baltimore; Carroll County and Annapolis, Md.; Hartford, Conn.; Allentown, Pa., and Newport News, Va.
Tribune Publishing also offers a range of marketing solutions, and operates a number of niche products, including television company Hoy, the El Sentinel newspaper and VidaLatina magazine, making it the country's largest Spanish-language publisher.
Tribune holds a market share of 5 per cent, while Gannett holds about a 12 per cent. A completed deal would give Gannett a 17 per cent share of total daily US newspaper circulation of around 41 million.
The media business has been in turmoil with many companies shedding newspapers and magazines, and focusing on faster-growing assets.
Newspaper ad spending in the US is expected to fall by 75 per cent to $12 billion in 2016 from a peak of $49 billion in 2005's, according to research firm Magna Global.