Gannett Co. has ended discussions to acquire Tronc, publisher of newspapers including the Los Angeles Times and the Chicago Tribune.
In a terse statement Tuesday, Gannett said, “Gannett Co. Inc. today confirmed that the company has been engaged in discussions with Tronc Inc. regarding a potential transaction and has determined not to pursue an acquisition of Tronc.”
Shares of Tronc — which changed its name from Tribune Publishing this summer (to much derision) — plummeted 20% in premarket trading after the Gannett announcement. Gannett’s stock was up more than 6%.
Gannett, America’s largest newspaper publisher whose biggest property is USA Today, had been pursuing a bid for Tronc for months to get its hands on newspapers in major markets including L.A., Chicago, Baltimore and Orlando. In May, Tronc (then called Tribune Publishing) rejected Gannett’s unsolicted $815 million buyout offer.
Merger talks between the companies had heated up again this fall. But last week, banks that had been prepared to finance Gannett’s bid for Tronc backed out of the deal, Bloomberg reported, amid concerns about the financial health of the newspaper biz.
Tronc said in a statement Tuesday that it had agreed to a purchase price in mid-September with Gannett and subsequently worked to finalize a merger agreement. But last week, “Gannett informed Tronc that its financing encountered an unexpected delay,” Tronc said.
“It is unfortunate that Gannett’s lenders made their decision to terminate their role in the transaction without the benefit of Tronc’s third quarter financials or any future projections,” Tronc said in the statement. “Tronc remained a constructive partner to Gannett as it sought to complete its financing for the agreed upon purchase price, however, Gannett was unable to do so and terminated discussions.”
A rep for Gannett countered that the company “had a number of financing options available and determined to terminate discussions with Tronc after considering both accretion to shareholders and whether the terms make sense for the company.”
“While we have great respect for the Tronc employees and properties, and while we believed that the acquisition would have provided an attractive opportunity to expand the USA Today Network NETWORK quickly, in the end the terms were not acceptable,” the Gannett rep said. “As we have said before, Gannett will not make acquisitions unless they are accretive to shareholders and the terms make sense for the company.”
Negotiations between the two parties had not been cordial. Tronc chairman Michael Ferro had publicly blasted Gannett management for what he characterized as a low-ball offer and accused Gannett of trying to “steal the company.” Gannett fired back, calling out Ferro’s lack of knowledge of newspaper publishing and said he was packing Tronc’s board with a slate of directors that included “four nominees who are long-time business associates of or have significant ties to him.”
Ferro’s resistance to dealing with Gannett drew the ire of Tronc shareholders including Oaktree Capital Management, which pressured Ferro to reconsider a deal, the Chicago Tribune reported in August.