McLean, Va.-based media titan Gannett Co. Inc. announced this morning it has proposed an acquisition of Chicago-based Tribune Publishing Co. valued at about $815 million, but that Tribune executives have refused to discuss the offer.
The transaction would pay Tribune shareholders $12.25 per share and assume $390 million of debt outstanding. The deal would provide a 63 percent premium to Tribune shareholders and a multiple of about 5.6x Tribune’s estimated 2016 EBITDA. Gannett first contacted Tribune on April 12 about the potential deal, but as of today had not succeeded in beginning constructive discussions.
Tribune Publishing was formed in August 2014, when it was spun off from Tribune Co. It operates 10 daily newspapers, including the Chicago Tribune, the Los Angeles Times, the Orlando Sentinel, The Baltimore Sun, the Hartford Courant, and the San Diego Union-Tribune, and is the third largest newspaper publisher in the U.S.
Gannett, which recently completed the acquisition of Milwaukee-based Journal Sentinel parent Journal Media Group, described the acquisition as a source of stability and a return for shareholders in an uncertain time for the publishing industry. It expects to gain about $50 million in annual cost synergies from the combination.
Tribune Publishing responded to the public announcement of the bid this morning with its own statement, indicating its board and advisors are reviewing the offer.
“The board is committed to acting in the best interests of shareholders and will respond to Gannett as quickly as feasible,” Tribune said in the release.
“The Gannett board unanimously believes that the acquisition of Tribune would deliver substantial strategic and financial benefits for the combined company, and we are pleased to offer Tribune stockholders a significant and compelling premium and immediate cash value for their investment,” said John Jeffry Louis, chairman of the Gannett board of directors. “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.”
“We believe Tribune shares the new Gannett’s unwavering commitment to journalistic excellence and delivering superior content on all platforms,” said Robert Dickey, president and chief executive officer of Gannett. “In this respect, the proposed combination of Gannett and Tribune would bring together two highly complementary organizations with a shared goal of providing trusted, premium content for the readers and communities we serve. We are confident that a combined Gannett and Tribune would add value for stakeholders of both companies as we work together to foster deep and vital connections among the members of our communities, provide excellent solutions for our business partners and drive value for our stockholders.”
