Gannett Co. announced on Monday that it had increased its all-cash offer for Tribune Publishing Co. to $15 per share valuing their new offer at roughly $475 million. just two weeks after Tribune’s board rejected a lower bid.
The improved offer comes just two weeks after Tribune rejected Gannett’s lower bid of $12.25 per share which valued the business at $400 meaning a 22% increase on its prior bid and nearly a 100% increase on Tribune Publishings share price of $7.52 on April 22 prior to making the company’s takeover bid public.
Gannett Chairman John Jeffry Louis said:
“Our increased offer demonstrates our commitment to engaging in serious and meaningful negotiations with the Tribune Board to reach a mutually agreeable transaction where Gannett acquires all of Tribune”.
“It is evident from our discussions with Tribune shareholders that there is overwhelming support for the companies to engage immediately.”
A representative from Tribune Publishing wasn’t immediately available for comment. The company has said the initial bid undervalued the company.
Gannett said its new bid indicates “greater confidence” in the company after they have now reviewed Tribune’s debt, pension liabilities and cash balance.
“We are committed to making this exciting transaction a reality,” said Robert Dickey, Gannett’s chief executive. Mr. Dickey added that the company’s strategy to extend its USA Today network would “seamlessly extend to Tribune.”
In recent years newspaper organisations have seen their revenues slide due to the internet causing demand to drop. Gannett saw its annual operating revenue drop by 9% to $2.89 billion in 2015, in comparison Tribune’s operating revenue slid by just 2.1% to $1.67 billion in the same period.
The two publishers have sent abrupt public letters between each other since Gannett announced its first offer for the company. Tribune has called Gannett out for “playing games” and said its approach has been “aggressive and hostile.” During last week Tribune also got approval for a shareholder rights plan also known as a poison pill. The plan is designed to reduce the value of a share by significantly increasing shares outstanding making it more expensive for an investor to acquire a controlling stake of the business. of its defense to try to stop Gannett from acquiring the publisher of the Los Angeles Times and other newspapers. Gannett owns USA Today and 107 other U.S. dailies. Shareholder rights plans, or poison pills, are designed to dilute the value of a stock by flooding the market with additional shares if certain conditions are met, making it expensive for an investor to acquire a controlling stake.
Shares of Tribune Publishing which owns the LA Times and other newspapers rose by 22% to $14 during premarket trading whilst Gannett, which owns 108 U.S newspapers including USA Today saw its shares remain flat at $15.63.