Tribune Publishing shares skyrocketed more than 60% in premarket trading this morning after Gannett went public with its acquisition proposal. Tribune had privately rejected Gannett’s offer to buy the parent of major metro dailies including the Los Angeles Times, the Chicago Tribune, the Baltimore Sun, and The Hartford Courant.
Tribune has “faced numerous challenges and leadership changes over the last few years,” Gannett CEO Robert Dickey says in a letter to Tribune’s CEO Justin Dearborn. “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.”
A union with the owner of USA Today “would create a company with the financial stability and flexibility equipped to preserve journalistic integrity, high standards and excellence for years to come. We would be able to both empower our journalists and facilitate the creation of exceptional content while delivering stockholder value.”
Gannett’s $12.25 a share cash offer represents a nearly 63% premium over Tribune’s $7.52 closing price on Friday. Including Tribune’s $390 million in debt, Gannett values the deal at $815 million.
Tribune says that it is reviewing the proposal and will “respond to Gannett as quickly as feasible.”
Gannett wants to expand its USA Today Network, launched late last year. It encourages collaboration between all of the the company’s media properties, giving them a common branding platform. It’s “the largest local to national network of journalists in the country,” Gannett Chairman John Jeffry Louis says.
The company says it can “quickly consummate a transaction without any financing condition.” A deal also “will not impact the tax-free treatment of Tribune’s recent spin-off transaction” from TV station owner and production company Tribune Media.
Gannett hired Methuselah Advisors to offer financial counsel, with legal advice from Skadden, Arps, Slate, Meagher & Flom.
The publisher says it’s “prepared to consider all alternatives to complete this transaction.”
Last month Gannett, which has more than 100 newspapers and digital properties, paid $280 million for the Journal Media Group, owner of the Milwaukee Journal Sentinel and Memphis’ The Commercial Appeal.
Tribune Publishing has been struggling, reflected in the more than 59% drop in its share price over the last 12 months.
Tech executive Michael Ferro became the largest shareholder in February, and quickly installed Dearborn, an associate, as CEO replacing Jack Griffin. Dearborn previously ran another property that Ferro controlled, Merge Healthcare, and had no experience running a newspaper company.
Dearborn told analysts last month that although “the media industry is a new vehicle for me,” its challenges “are similar to what most businesses confront in the digital world.” He gave editors at Tribune’s publications dual roles, as both Publisher and Editor-in-Chief, to “drive a content-first culture and achieve local market and company-wide business objectives.”
The CEO added that Tribune was “focused on consolidation within the legacy publishing industry” as well as “technology initiatives that will accelerate our digital and commerce expansion.”