(FILES) This file photo taken on August 20, 2013 shows an unidentified man walking through the lobby of the Gannett-USA Today headquarters building in McLean, Virginia. Gannett on April 25, 2016 announced a bid for Tribune Publishing for $815 million in a deal that would consolidate the owner of USA Today with the Los Angeles Times and Chicago Tribune.The plan would bring together two large newspaper groups which have been spun off from larger media conglomerates amid ongoing woes in the print sector. / AFP PHOTO / PAUL J. RICHARDS
BENGALURU: Gannett Co Inc, publisher of USA Today, said it offered to buy Tribune Publishing Co in a deal valued at about US$815mil (RM3.19bil), including debt, but the owner of the Los Angeles Times and Chicago Tribune refused to begin “constructive” talks.
“We therefore are prepared to consider all alternatives to complete this transaction,” Gannett chief executive Robert Dickey said in a letter to Tribune Publishing’s board on Monday.
Tribune Publishing, however, said in a statement that it had told Gannett it would engage financial and legal advisers to review the proposal and its “numerous contingencies.”
Chicago-based Tribune Publishing has been shaking up its top management, replacing its chief executive in February and said a month later that it would replace its chief financial officer.
The company also dismissed auditor PricewaterhouseCoopers LLP in March after identifying material weaknesses in internal controls over its financial reporting.
“Tribune in some degree has been in disarray with the recent management changes and the company has been slow to implement its digital strategy,” said Michael Kupinski, an analyst at Noble Financial Capital Markets.
“Gannett seems to be taking this as an opportunity to strike quickly,” he said, adding that Tribune Publishing would be a compelling acquisition at Gannett’s offer of US$12.25 per share.
Peter Lewis of Towle & Co, the seventh-largest shareholder in Tribune, said however that the offer price was well below the investment firm’s sell target, which was in the “high teens”.
The offer represents a premium of about 63% to Tribune Publishing’s Friday closing price US$7.52. Tribune’s Publishing’s shares closed at US$6.86 on April 11.
Tribune Publishing’s shares, which have lost half of their value in the last nine months, were up 57% at US$11.78 in early trading on Monday. Gannett’s shares, which have gained 16% over the same period, were up 0.4% at US$15.84.
Gannett’s proposal, made on April 12, includes the assumption of US$390mil (RM1.52bil) of debt as well as other liabilities.
The offer also comes at a time when the print industry is grappling with falling sales and circulation as more people get their news from digital media.
“Continuing to refuse to engage in a dialogue with us will only serve to delay the ability of your stockholders to receive the value represented by our all-cash offer,” Dickey said.
Tribune Publishing reported a loss of US$2.8mil (RM10.95mil) in 2015 as revenue slipped 2.1% to US$1.67bil (RM6.53bil). Gannett posted a profit of US$146.1mil (RM571.15mil), while revenue fell 9% to US$2.89bil (RM11.30bil).
Tribune Co spun off its publishing assets into Tribune Publishing in 2014, and renamed the parent company, which houses its broadcasting and digital assets, Tribune Media Co. - Reuters
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