Gannett Ends Talks to Acquire Los Angeles Times Owner
Tronc shares drop nearly 30 percent in pre-market activity on the news from Gannett, which owns such newspaper brands as USA Today, the Detroit Free Press and the Des Moines Register.
Newspaper giant Gannett Co., which publishes USA Today, among others, has ended discussions about a possible acquisition of Los Angeles Times, Chicago Tribune and Orlando Sentinel owner Tronc, formerly known as Tribune Publishing.
Gannett in a statement on Tuesday said that it "has been engaged in discussions with tronc regarding a potential transaction and has determined not to pursue an acquisition of tronc."
Tronc shares dropped nearly 30 percent in pre-market activity.
Tronc previously rejected an increased takeover offer by Gannett but agreed to hold further talks about a potential transaction. It earlier in the year also adopted a so-called "poison pill" provision to fend off hostile takeover attempts.
Gannett's original takeover offer was for $12.25 per Tronc share in cash, or $815 million.
Gannett also owns such media properties as the Detroit Free Press, The Des Moines Register and such sports websites as MMAjunkie.com, baseballhq.com and hoopshype.com and is the largest U.S. newspaper publisher as measured by total daily circulation.
“We were informed early this morning that Gannett has decided to abruptly terminate discussions regarding a potential business combination with Tronc," said a statement from Tronc. "As noted previously, Tronc had serious doubts about Gannett’s ability to finance a transaction that was in the best interest of Tronc’s shareholders and other stakeholders."
It added: "Nonetheless, over the past several months, the Tronc board, management team and their advisors engaged in substantive discussions and due diligence with Gannett regarding a potential transaction, with an unwavering focus on creating value for Tronc shareholders. The parties agreed to a purchase price in mid-September and subsequently worked to finalize a merger agreement. Last week, Gannett informed Tronc that its financing encountered an unexpected delay. It is unfortunate that Gannett’s lenders made their decision to terminate their role in the transaction without the benefit of Tronc’s third quarter financials or any future projections."
Concluded the company: "The board and management team of Tronc remain committed to taking the necessary steps to transform its business in response to the massive changes that have overtaken the publishing industry, supporting the company’s outstanding journalists and, above all, delivering value to shareholders. Tronc continues to make progress in implementing the company’s strategic plan to leverage technology and effectively monetize its world class content. The implementation of this plan will take time but the company remains on track in terms of delivering on its near-term financial goals and is confident in its ability to deliver improved performance and shareholder value."
Both Gannett and Tronc are newspaper companies created in separations of larger media companies' print and TV and other operations. Gannett announced its split into two companies in summer 2014 and completed it the following summer. The TV stations business is now called Tegna.
Tribune had announced its separation into two businesses in summer 2013. CEO Peter Liguori oversees Tribune Media, which includes TV stations, WGN America and digital assets, among other things. Tribune Publishing has since changed its name to Tronc.
It has repeatedly been mentioned as a possible takeover target over the years. News Corp chairman Rupert Murdoch tweeted about the issue a couple of years ago. "Sorry can't buy Trib group or L.A. Times — cross-ownership laws from another age still in place," the media mogul said then in a reference to FCC ownership rules for newspapers and TV stations in the same market.