Gannett Co., which owns USA TODAY and more than 100 other media properties across the country, said Monday it offered to buy Tribune Publishing for about $815 million, its second big expansion move since spinning off from its former parent less than a year ago.
In a letter to Justin Dearborn, CEO of Tribune, which owns the Los Angeles Times,Chicago Tribune and nine other dailies, Gannett CEO Robert Dickey reiterated Monday a private April 12 offer to pay $12.25 per share, a 63% premium to Tribune’s closing stock price last Friday. Gannett’s deal includes assuming $390 million of Tribune’s debt outstanding as of Dec. 31, 2015.
The offer price is about 5.6 times Tribune’s estimated 2016 earnings before interest, taxes and other items (EBITDA). Gannett estimates about $50 million a year in “synergies” savings. Gannett owns USA TODAY plus 107 local news organizations including the Detroit Free Press, Cincinnati Enquirer, Des Moines Register, theMilwaukee Journal Sentinel and Arizona Republic.
“We believe Tribune shares the new Gannett’s unwavering commitment to journalistic excellence and delivering superior content on all platforms,” Dickey said in a statement Monday. “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.”
Dickey said in an interview that since the original offer, he has had several phone calls with Tribune’s non-executive chairman, Michael Ferro, and Dearborn. But the letter says Tribune has refused to begin formal negotiations, prompting Dickey to reveal the bid publicly.
“What we’re hoping for is to sit down with Tribune’s board and work out a transaction. We’re confident that, with cooperation between the companies, we can complete due diligence in a very timely fashion and execute an agreement,” Dickey said.
Shares of Tribune closed Friday at $7.52, up 2.6%. In pre-market trading Monday morning, shares shot up 54% to $11.56.
“The board is now engaged, with the assistance of its advisors, in a thorough review,” Tribune Publishing said Monday in a statement. “The board is committed to acting in the best interests of shareholders and will respond to Gannett as quickly as feasible.”
In August, 2014, Tribune Publishing was spun off from its former parent, Tribune Co., which was looking to focus on broadcasting and eliminate its exposure to the declining print advertising market. Tribune Co. then renamed itself Tribune Media Co.
“Since the beginning of 2016, Tribune Publishing has been undertaking a transformation and has made significant organizational changes,” Tribune Publishing said. “With a focused strategy, unmatched collection of award-winning content and brands, and the right leadership team in place, Tribune Publishing is well-positioned to create value for shareholders.”