Gannett Offers to Buy Out Tribune Publishing for $815 Million

One of the largest newspaper publishers in the United States wants to get its hands on Tribune Publishing. Gannett, which owns USA Today, offered $815 million for the company.

The $12.25 cash offer per share represents a 63 percent premium to the Tribune's closing stock price on Friday. The offer comes just a few months after Michael Ferro assumed control of Tribune Publishing as the company's single largest shareholder.

Gannett's CEO Robert Dickey reportedly has had several conversations with Ferro but no negotiations, according to an interview he gave USA Today. Ferro is Tribune Publishing's non-executive chairman who essentially runs the entire company.

Tribune Publishing released this statement on Monday:

On receiving the April 12 proposal, the Company 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. The Board is committed to acting in the best interests of shareholders and will respond to Gannett as quickly as feasible.

Gannett, based in McLean, Virginia, made the offer on April 12 privately, according to a report in USA Today, and followed up with a letter dated April 25 from Gannett's CEO to new Tribune CEO Justin Dearborn. Gannett's offer includes the assumption of $390 million in Tribune debt.

The letter reads, in part:

“We believe Gannett is uniquely willing and able to propel Tribune into the position of strength that will allow its beloved and historic publications and other assets to survive and thrive in this challenging environment. Given the opportunity to benefit from the significant premium and near-term liquidity, we are confident that Tribune’s stockholders will embrace our offer.”

Dearborn, in an email Monday morning to Tribune company staff, said the offer was not sought and that he and Ferro were not interested in selling.

"As a public company, our Board is obligated to evaluate any proposal of this nature and we take this responsibility seriously." Dearborn wrote.

Ferro took control of Tribune Publishing, which owns the L.A. Times, Baltimore Sun, Orlando Sentinel and other newspapers, in February. Ever since, local speculation has been focused on a merger between the Chicago Tribune and the Chicago Sun-Times. Last week, Tribune purchased Splash, an entertainment magazine, from the Sun-Times. Ferro started Splash a few years ago when he took over the city's tabloid paper.

Some industry watchers believe Tribune Publishing could sell its publications outside of Chicago, however, with Ferro retaining control of the Chicago Tribune, a publication he's long coveted.

Gannett owns 108 newspapers, and recently completed the purchase of the Milwaukee Journal-Sentinel as part of a $280 million deal for the Journal Media Group.

“What we’re hoping for is to sit down with Tribune’s board and work out a transaction," Dickey told USA Today. "We’re confident that, with cooperation between the companies, we can complete due diligence in a very timely fashion and execute an agreement."

Robert Feder, who covers media news at RobertFeder.com, notes a wrinkle in the Tribune-Gannett development:

Since March 2015 Gannett has provided at least 10 pages of USA Today-branded editorial content each day in the Sun-Times. The arrangement substantially increased the paper’s coverage of national and international news, business and sports.

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