Although Tribune doesn’t seem to be particularly interested, increasing overheads and reduced finances could see the publishing houses come to the negotiating table.
In its bid to acquire Tribune Publishing Co., Gannett Co Inc., which publishes USA Today, has raised its offer for the company to $15 per share, up from $12.25, thus valuing Tribune Publishing, which publishes the Los Angeles Times and the Chicago Tribune, to nearly $475 million.
With debt financing, the offer is worth around $864 million. With this information hitting the market, Tribune’s shares surged by 22.1% to $14 in early trading on Monday. However, it was still below its latest offer price of $15 which was set at a premium of 31% to Tribune’s share prices as of their Friday’s closing.
Earlier this month, in order to thwart Gannett’s plans, Tribune’s board has put into motion a shareholder’s rights plans, which is also known as a “poison pill”. Gannett took this strategic step after analyzing Tribune’s debt and pension liabilities.
“In addition, after further review, Gannett has greater confidence in its ability to yield additional operational improvements in this transaction,” said Gannett.
On its part, Tribune has said it would thoroughly review the revised offer.
Meanwhile, its third largest shareholder, Oaktree Capital Group LLC, has called on the company to negotiate a deal with Gannett. Incidentally, Oaktree has a 14.8% stake in Tribune.
The move to consolidate operations come in the wake of newspapers struggling to survive in an increasingly digital environment. Rising costs, declining circulations and falling advertising sales have pushed publishers to find new areas of growth as well as consolidate their operations.
Gannett shares stood at $15.63 in early trading.
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