What:Gannett Co., Inc. and ReachLocal, Inc. announced a merger agreement whereby Gannett acquires the outstanding shares of ReachLocal, Inc., for US$4.60 per share in cash, via a tender offer.
Why it matters: The acquisition of ReachLocal accelerates Gannett’s digital growth strategy, adding more than US$320 million of annual digital revenue, as well as digital marketing solutions technology.
Gannett Co., Inc. and ReachLocal, Inc. announced a merger agreement whereby Gannett will acquire the outstanding shares of ReachLocal, Inc., for US$4.60 per share in cash, via a tender offer. This represents a 188% premium to the unaffected closing price on Friday, June 24, 2016, and a total enterprise value of approximately US$156 million.
Initially, ReachLocal will expand Gannett’s digital revenue by roughly 50% with its more than 16,000 customers in markets throughout North America, Latin America, Europe and Asia/Pacific. At the conclusion of Gannett’s current digital services arrangement in its existing markets in mid-2017, the combined organization will benefit from leveraging ReachLocal’s best-in-class digital marketing services products in Gannett’s existing 107 local markets in the U.S. ReachLocal brings a diversified client base with home services, healthcare, automotive and professional services representing its largest vertical markets.
Under the terms of the agreement, a subsidiary of Gannett will commence a tender offer for all outstanding shares of ReachLocal for is$4.60 per share in cash, which will remain open for at least 20 business days. The transaction is subject to customary closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and there being validly tendered and not withdrawn in the tender offer a majority of the outstanding ReachLocal shares. Shortly following the closing of the tender offer, in a second-step merger that will not require stockholder approval, Gannett will acquire all remaining ReachLocal shares.
Sharon Rowlands, ReachLocal chief executive officer said, “We believe that this powerful combination will drive growth and allow us to accelerate innovation, enabling the best and most complete digital marketing solutions in the market today.”
Robert Dickey, Gannett president and chief executive officer said, “The acquisition of ReachLocal accelerates Gannett’s digital growth strategy, adding more than US$320 million of annual digital revenue, the best digital marketing solutions technology in the market, and an outstanding and well-respected management team to Gannett’s digital business. ReachLocal’s focus on local small and medium sized businesses aligns well with Gannett’s local-to-national strategy and extends our reach into new local markets.”