Newspaper giant Gannett Co., the owner of USA Today, said Monday it has offered to acquire Tribune Publishing Co., owner of the Los Angeles Times, Chicago Tribune, Orlando Sentinel and other daily papers.
The offer is for $12.25 in cash per Tribune share, or approximately $815 million, including the assumption of certain Tribune liabilities, including approximately $390 million of debt.
Gannett said its all-cash bid would provide Tribune stockholders a 63 percent premium to the closing stock price of Tribune shares on April 22, and a 58 percent premium to the volume weighted average trading price over the past 90 days.
Tribune Publishing’s stock rose more than 50 percent in early trading. As of the close of the market, it was up 52.9 percent at $11.50. Gannett shares were up 6.5% to $16.79.
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. The company said it had made the offer privately on April 12, but Tribune Publishing hasn’t engaged in constructive talks.
In an open letter to Tribune Publishing CEO Justin Dearborn, Gannett CEO Robert Dickey said: “We are disappointed by the response we received from you in your letter of April 22, 2016, regarding our proposal to acquire all of the outstanding shares of Tribune Publishing Co. for an all-cash purchase price of $12.25 per share, and Tribune’s continued refusal to begin constructive discussions with us. We believe our proposal, which we first made in my letter to your board dated April 12, 2016, and reiterated in several phone discussions … since, is highly compelling for Tribune’s stockholders and represents substantial value and immediate liquidity for them.”
Gannett chairman Jeffry Louis said: “The Gannett board unanimously believes that the acquisition of Tribune would deliver substantial strategic and financial benefits for the combined company.” He added: “A combination with Tribune would rapidly advance Gannett’s strategy to grow the USA Today Network, the largest local to national network of journalists in the country, to include more local markets and new platforms, which we believe will benefit readers and result in significant and sustained value creation for Gannett stockholders.”
Dickey added that the proposed combination “would bring together two highly complementary organizations with a shared goal of providing trusted, premium content for the readers and communities we serve.”
Gannett cited financial synergies of approximately $50 million annually, subject to due diligence, “that are anticipated to drive compelling near- and long-term growth and value creation at the combined company.”
Tribune Publishing said it was reviewing the offer. “On receiving the April 12 proposal, the company communicated by telephone to Gannett that the board of directors would engage financial and legal advisors to assist it in reviewing the proposal … The board is now engaged, with the assistance of its advisors, in a thorough review. The board is committed to acting in the best interests of shareholders and will respond to Gannett as quickly as feasible.”
But the company also highlighted: “With a focused strategy, unmatched collection of award-winning content and brands, and the right leadership team in place, Tribune Publishing is well-positioned to create value for shareholders.”
Both Gannett and Tribune are newspaper companies created in separations of larger media companies’ print and TV and other operations. Gannett announced its separation in summer 2014 and completed it last summer. Its 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 Media recently said it would review its strategic options, including possible asset sales.
Tribune Publishing has been mentioned as a possible buyout target before. News Corp owner 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.