Gannett raises all-cash buyout offer for Tribune Publishing to $864 mn
16 May 2016
Gannett Co Inc, the largest US newspaper publisher, today raised its all-cash buyout offer for Tribune Publishing Co from $12.25 a share to $15 per share, valuing the publisher of the Chicago Tribune and the Los Angeles Times at about $864 million.
The revised offer, which is subject to due diligence, is a premium of 99-per cent to Tribune's closing price of $7.52 per share on 22April 2016, the last trading day before Gannett publicly announced its initial offer for Tribune.
The total value of the revised offer is approximately $864 million, including the assumption of $385 million debt.
John Jeffry Louis, chairman of Gannett, said, ''Our increased offer demonstrates our commitment to engaging in serious and meaningful negotiations with the Tribune Board to reach a mutually agreeable transaction where Gannett acquires all of Tribune.
''It is evident from our discussions with Tribune shareholders that there is overwhelming support for the companies to engage immediately regarding our proposed transaction. By increasing our offer at this time, we are reaffirming Gannett's belief that this transaction would deliver significant value to both companies' stakeholders and that the time to act is now.''
Gannett said it revised its bid following an analysis of Tribune's debt, cash balance and pension liabilities, which were reported on 5 May.
Earlier this month, Tribune's board had rejected Gannett's initial unsolicited takeover offer as too low and adopted a shareholder rights plan - known as a "poison pill", in order to make a buyout extremely expensive.
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.
Analysts opine 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.
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.