Tribune accepts Zell's $8.2 bil buyout offer
EmptyThe Chicago billionaire has beaten out a pair of local sugar daddies for the winning bid on the Windy City parent of the Los Angeles Times - for now.
L.A.-based financiers Eli Broad and Ron Burkle reportedly still can dig deeper and up their offer for Tribune, even though the media group's board announced its acceptance of an $8.2 billion bid for the company by Chicago real estate tycoon Sam Zell on Monday.
Indeed, Zell and the Broad-Burkle camps each rejiggered their offers once previously, with the former winning the day on Sunday by agreeing to match a $34 a share offer from the latter bidders.
In separate moves also announced Monday, Tribune said it would sell the Chicago Cubs and a 25% stake in Comcast SportsNet by year's end. Proceeds would be used to pay down debt, Tribune said.
Zell's bid involves a personal investment of $315 million and the use of an employee stock ownership plan, and accompanying tax breaks. The ESOP would become the majority stakeholder once the company is taken private and the transaction completed in the second quarter.
Zell - a colorful businessman with no publishing experience who sold his real estate company to the Blackstone group for $23 billion in February - would become chairman of Tribune, the nation's second largest media group after Gannett. He is entitled to purchase 40% of existing common shares as part of the transaction.
Tribune owns 11 newspapers and 23 TV stations. The company has been conducting a strategic review since September, under prompting from Los Angeles' Chandler family - former Times owners and continuing Tribune shareholders. The Chandlers, who control a 20% stake in Tribune, reportedly have agreed to back the bid from Zell, who would get a relatively modest $25 million break-up fee if the company decides not to complete the transaction for any reason.
If completed, the transaction would leave the company with an estimated $13 billion in debt.
Tribune had set deadlines first of Dec. 31 and then of March 31 for completing its strategic review. In the end, officials expressed pleasure with the results of the extended process.
"The strategic review process was rigorous and thorough," William Osborn, the Tribune director who supervised the strategic review. "We determined that this course of action provides the greatest certainty for achieving the highest value for all shareholders and is in the best interest of investors and employees."
Critics of Tribune's cross-ownership of TV stations and newspapers in individual markets including Los Angeles pledged to opposed the sale to Zell.
"I am delighted to be associated with Tribune Company, which I believe is a world-class publishing and broadcasting enterprise," Zell said in a statement."As a long-term investor, I look forward to partnering with the management and employees as we build on the great heritage of Tribune Company."
Tribune shares surged 78 cents, or 2.4%, to $32.89 in active midday trading on Monday.