The Los Angeles Times is owned by Tribune Publishing. (Al Seib / Los Angeles Times)
May 16, 2016
Gannett boosted its all-cash offer to acquire Tribune Publishing to $15 per share, raising the stakes after the owner of the Los Angeles Times, Chicago Tribune and other major newspapers earlier this month rejected an unsolicited $12.25-a-share bid.
The revised offer, disclosed in a Securities and Exchange Commission filing Monday, values Chicago-based Tribune Publishing at $864 million, rather than $815 million, including the assumption of debt.
The sweetened bid is nearly double the price that Tribune Publishing’s stock was trading at before Gannett made its initial offer public April 25. It increases pressure on Tribune Publishing’s board to open the door to discussions in advance of the company’s annual meeting June 2, where Gannett is enlisting shareholders for a mostly symbolic proxy fight.
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“We’re looking for the board to … move forward so that we can get in and start our due diligence,” said Robert Dickey, president and chief executive of Gannett. “We’re ready to go tomorrow, if they give us the heads-up.”
Tribune Publishing confirmed receipt of the higher bid Monday and said in a news release that its board will “thoroughly review” Gannett’s revised proposal.
The higher offer reflects additional analysis of Tribune financial statements filed this month, and Gannett’s “greater confidence in its ability to yield additional operating improvements” in the transaction, the company said. Gannett previously said it would save $50 million annually through the Tribune Publishing acquisition.
Cowen and Co. analyst Lance Vitanza said Monday the increased bid should get both sides talking, with perhaps a less hostile dynamic.
“It’s certainly a step in the right direction,” Vitanza said. “It leaves us increasingly confident that a consensual transaction will ultimately occur.”
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Gannett and Tribune Publishing leadership met Thursday in Chicago but reported no progress, according to a Gannett filing Friday.
At the meeting, Tribune Publishing Chairman Michael Ferro detailed a recently unveiled digital strategy named Tronc that he said would create more value for shareholders, Dickey said Monday.
Monday’s increased offer was based on financial information gleaned from Tribune Publishing’s first-quarter earnings report, which revealed more cash on the books, slightly lower debt and reduced pension liability, Dickey said. It was not based on Tribune Publishing’s revised long-term earnings projections or Tronc.
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