Tribune Publishing Co (NYSE: TPUB) jumped up 53.06% to $11.51 on Monday after Gannett Co Inc. (NYSE: GCI) offered approximately $815 million bid to takeover Tribune which owns newspapers including The Los Angeles Times and The Chicago Tribune.
Gannett is offering $12.25 in cash for each share of Tribune which represented 63% premium compared with the stock’s closing price last Friday. Gannett announced the total deal valued of $815 million including the assumption of Tribune’s debt.
“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.”
Tribune Publishing was spun off from Tribune Media Co. (NYSE: TRCO) in August 2014 and saddled with about $350 million in debt. After spun off, share of Tribune has tumbled as Tribune Publishing’s newspapers, like many print publications, have struggled with decreasing circulation and declining print advertising revenue.
Gannett’s takeover comes amid a frenzy of newspaper industry deals, as bigger players scout for bargains to help give them the economic advantages of scale in a business under pressure on multiple fronts.
“Given the opportunity to benefit from the significant premium and near-term liquidity, we are confident that Tribune’s stockholders will embrace our offer,” said Robert Dickey, the president and chief executive of Gannett in the newly disclosed letter. “We would prefer to negotiate with Tribune, but we have determined that making your stockholders aware of our all-cash proposal is necessary given Tribune’s attempts to delay constructive engagement.”
Methuselah Advisors is providing financial advice to Gannett, while Skadden, Arps, Slate, Meagher & Flom is the legal adviser. Goldman Sachs and Lazard serving as financial advisers for Tribune Publishing, while Kirkland & Ellis is providing legal advice.