McLean, Va.-based media giant Gannett Co. Inc. has received approval from the U.S. Department of Justice to complete its acquisition of Journal Media Group Inc.
Journal Media Group was formed in 2015 through the merger of Milwaukee’s Journal Communications and The E.W. Scripps Co. The newspaper and publishing operations were spun off and combined in the new Milwaukee-based company Journal Media Group, which has about 3,000 employees nationwide. The group includes the Milwaukee Journal Sentinel and its digital products, and daily newspapers and related digital offerings in 13 other U.S. markets, which include the Naples Daily News, the Knoxville News Sentinel and the Corpus Christi Caller-Times.
The companies had been on hold while the Justice Department evaluated whether the merger would post antitrust concerns. The department also waived the waiting period normally required after the investigation under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, allowing the companies to complete the transaction tomorrow.
When a deal is valued at more than $78.2 million, it requires federal approval because of antitrust concerns. The Federal Trade Commission and Department of Justice evaluate how the companies’ market is defined and whether the merger would have an adverse impact on their competition. According to the FTC, the vast majority of deals it reviews are allowed to proceed after its initial review, but sometimes a second request for information is issued. This occurred in the pending Gannett/Journal deal, and could have resulted in three possibilities: the investigation closing as usual; the FTC entering into a settlement with both companies; or the FTC taking legal action to block the transaction.
Gannett and Journal announced they plan to close on the deal after regular trading ends on the New York Stock Exchange tomorrow.
The transaction price is about $280 million, and each shareholder would receive $12 per share in cash.
When the deal is completed, Gannett will oversee publications in 106 U.S. markets serving more than 100 million unique domestic digital visitors per month. Its flagship publication is USA Today, and it also owns several daily newspapers in Wisconsin. Gannett expects to add about $450 million to its revenues through the acquisition and about $60 million of adjusted EBITDA, including more than $10 million in “immediately available synergies,” with another $25 million in operating synergies expected over the next two years as the companies consolidate administrative and corporate operations, integrate with shared service centers and consolidate certain printing and distribution assets in adjacent markets.
Tim Stautberg, president and chief executive officer of Journal Media Group, said earlier this month that the company would no longer need its downtown Milwaukee headquarters following the transaction. There are about 400 employees at the Journal Media Group’s offices at 333 W. State St., and about 150 of those are corporate employees, but it’s unclear how many of those corporate roles would remain.