Gannett Co. has offered to acquire all of the outstanding shares of common stock of Tribune Publishing Co., which owns the Los Angeles Times, Chicago Tribune and nine other dailies, for around $815 million. The deal would mark a historic level of consolidation of major newspapers in the U.S.
The offer price of $12.25 per Tribune share represents a 63% premium to the closing stock price on April 22, 2016. The bid would include assuming around $390 million of Tribune debt outstanding as of Dec. 31, 2015. Gannett said that the deal is expected to deliver synergies of around $50 million a year.
Gannett owns USA Today and more than 100 other media properties across the U.S., including the Detroit Free Press, Cincinnati Enquirer, Des Moines Register, the Milwaukee Journal Sentinel and Arizona Republic.
Gannett chairman John Jeffry Louis said: “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.”
Robert J. Dickey, president and chief executive officer of Gannett, said: “We believe Tribune shares the new Gannett’s unwavering commitment to journalistic excellence and delivering superior content on all platforms. 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.”
Tribune said it was assembling a team of advisors to evaluate the offer, including Goldman Sachs and Lazard. The company has not formally rejected the deal but is believed to be focused on the fact that the current management team at Tribune has only been in place for three months. Tribune sees no urgency for a deal, given that the current management team hasn’t had time to execute its plan. News Corp has circled Tribune in the past and Gannett’s lowball bid could stir other offers.