Tribune Publishing Co., the owner of the LA Times, plans to reject a $864 million buyout bid, the latest offer from Gannett Co Inc., but has said it will be disclosing confidential information with the newspaper company according to a report from Reuters.
The move offers a means for Gannett, the owner of USA Today, and Tribune Publishing to engage in negotiations after the former has launched a proxy battle. Last week, it was reported that Gannett asked Tribune shareholders to withhold their votes for the eight nominees of the Chicago-based media company’s board of directors. Moreover, Gannett was said to have accused the company of having governance deficiencies.
Anonymous sources close to the matter have said that while Tribune Publishing considers Gannett’s cash offer of $15 per share to be insufficient, it will still allow the potential buyer the access to some of its confidential corporate information through a non-disclosure agreement.
Gannett’s initial buyout bid in April amounted to $12.25 per share only, which is equivalent to $815 million, but was increased in May to $15 per share, which is equivalent to $864 million. The sources, who asked not to be identified because of ongoing confidential discussions, commented that there is no certainty that the potential buyer will use this opportunity to make an even higher offer.
Meanwhile, the newspaper industry is currently struggling with high costs, declining advertising revenue, and a wide-ranging move toward digital content. Newspaper companies are being sold but successes in this endeavor were hardly seen.
Digital First Media, the second largest US newspaper chain by circulation, and also the publisher of the Denver Post and San Jose Mercury News, explored a sale last year before talks with buyout firm Apollo Global Management fell apart.
Owner and publisher of The New York Daily News, Mort Zuckerman, tried to sell the newspaper chain last year but then changed his mind after the bids came in too low.
While the newspaper industry is challenging, Tribune Publishing is now seen as an acquisition target as it owns the Los Angeles Times, one of the country’s most widely distributed newspapers, and the Chicago Tribune. Gannett is pursuing Tribune Publishing in an attempt to reach a broader scale to allow it to bring cost savings and gain higher profits.
At the time of writing, Patrick Soon-Shiong made an unexpected $70.5 million investment in Tribune Publishing on Monday, potentially forcing the USA Today publisher to drop its buyout bid.
Soon-Shiong is a billionaire biotech entrepreneur and part-owner of the Lakers and now the second largest Tribune shareholder, edging above Oaktree Capital Management’s investment.