Gannett Offers US $815 Million to Buy Tribune Publishing
What: Publicly traded media holding company Gannett Co., Inc., the largest newspaper operator in the U.S, has submitted an unsolicited proposal to acquire Tribune Publishing Co. in a deal valued at around US$815 million.
Why it matters: If the deal goes through, the U.S. newspaper landscape will be farther consolidated. According to Gannett, a combination with Tribune Publishing, would rapidly advance Gannett's strategy to grow the USA Today network, the largest local to national network of journalists in the country.
Tribune Publishing Co. has received an unsolicited proposal, with numerous contingencies, from Gannett Co., Inc. on April 12, 2016 to acquire all outstanding shares of Tribune Publishing for approximately US$388.3 million.
A combination with Tribune would rapidly advance Gannett's strategy to grow the USA Today network, with distribution in cities including Chicago and Los Angeles.
Gannett Chairman John Jeffry explained that 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."The consolidation of both newspaper companies would also be aimed at cutting costs at a time of uncertainty for the industry. Gannett said it expected annual synergies of about $50 million.
Based in McLean, Virginia,Gannett is the owner of USA Today and other newspapers. Tribune's properties include the Los Angeles Times, Chicago Tribune and other newspapers (e.g. Hoy Los Angeles and Hoy Chicago). Since the beginning of 2016, Tribune Publishing has been undertaking a transformation and has made significant organizational changes. The Company, which has a new Board chair, CEO (Justin Dearborn) and CFO, is focused on executing a content-first strategy. This strategy centers on using innovative technology to leverage Tribune Publishing’s valuable content and distribution channels. The Company plans to increase agility and drive innovation while driving efficiencies and reducing costs. Among other recent key initiatives, the Company has added new talent with expertise in technology and key industry verticals to identify and drive customer transactions.
The deal proposed by Gannet, includes about US$390 million of outstanding debt, is worth around US$815 million. On receiving the April 12 proposal, Tribune communicated by telephone to Gannett that the Board of Directors would engage financial and legal advisors to assist it in reviewing the proposal. On April 22, Tribune Publishing’s Board sent a letter to Gannett indicating it was finalizing engagements with Goldman, Sachs & Co. and Lazard as financial advisors and Kirkland & Ellis LLP as legal advisor. The Board is now engaged, with the assistance of its advisors, in a thorough review.
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