The publishing industry is facing a turbulent time with increased costs, digitization, and low advertisement dollars. By acquiring Tribune, Gannett hopes the merger will bring about lower costs and increase its foothold and thus bring in more mullah.
As per sources familiar with the matter at hand, Tribune Publishing Co has decided to reject Gannett Co Inc’s takeover bid of $864 million, it will nevertheless agree to share confidential information with the U.S. publishing house.
The strategic move, which is part rejection and part reconciliation, offers Gannett a means to engage in negotiations with Tribune Publishing, following a bitter dispute.
In the previous week, in a sneak attack Gannett had asked Tribune Publishing’s shareholders to withhold support for the latter’s eight nominees to the board of directors at Tribune Publishing’s annual scheduled to take place on June 2.
According to sources, despite the fact that Tribune considers Gannett’s offer of $15 per share cash, for its acquisition, as inadequate, it will however provide it access to some of its confidential corporate information, under the terms of a non-disclosure agreement.
There is no certainty however, under the guise of this opportunity Gannett will not table a higher offer, revealed sources.
Representatives for Gannett and Tribune could not be immediately reached for comment.
The pursuit of Tribune by Gannett comes at a time when the newspaper industry is facing serious challenges of high costs, moves for increased digitalization, and shrinking advertising dollars. It wouldn’t be imprudent to conclude that Gannett is betting that their combined sizes will bring about more profits thanks to savings from their integration.
The move has however made Tribune an acquisition target. It will be interesting to see whether other publishing houses, including McClatchy Co, new Media Investment Group Inc, and News Corp will jump in the fray and try to acquire it.
On its part Gannett, has been relentless, Last month it made an unsolicited takeover offer for Tribune by offering $12.25 per share in a deal worth $815 million. It quickly followed that up with a substantial jump of $15 per share.
Seeing the increased interest, Oaktree Capital Group LLC, Tribune’s second largest shareholder, has urged the company’s board through a letter it sent it last week, to explore the possibility of a sale.
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