Gannett withdraws offer to buy Tronc
Financing cited as hurdle by 1 side, disputed by other
Gannett on Tuesday abruptly ended its six-month effort to acquire Tronc, owner of the Daily Southtown, Los Angeles Times, Chicago Tribune, Orlando Sentinel, Baltimore Sun and several other newspapers.
The deal would have extended the footprint of Gannett, the nation's largest newspaper company and the owner of USA Today.
Gannett announced its withdrawal in a statement in which it “confirmed that the company has been engaged in discussions with Tronc Inc. regarding a potential transaction and has determined not to pursue an acquisition of Tronc.”
Tronc — which also owns the Hartford Courant, the South Florida Sun Sentinel, The Morning Call in Allentown, Pa., and the Daily Press, based in Newport News, Va. — acknowledged Gannett's withdrawal in a statement blaming the collapse of the deal on an “unexpected delay” in financing encountered by Gannett. The statement disclosed that the companies had agreed on a purchase price in mid-September.
Gannett disputed that financing was an obstacle. “Gannett had a number of financing options available and determined to terminate discussions with Tronc after considering both accretion to shareholders and whether the terms make sense for the company,” the company said.
Cowen and Co. analyst Lance Vitanza said Tuesday that he believed Gannett would regroup and eventually return with another offer.
Gannett first tried to acquire the former Tribune Publishing in April with an offer of $12.25 a share. The overture was rejected by Michael Ferro, Tronc's largest shareholder and nonexecutive chairman. Gannett later publicly improved its offer to $15 a share, or $475 million (excluding debt). In the latest talks, the offer was reportedly raised to $18.75.
Shareholders pressured Tronc to negotiate with Gannett for months.
Ferro has tied Tronc's future in part to the infusion of new technologies, and the company on Tuesday said the transformation plan remained on track.
“The implementation of this plan will take time but the company remains on track in terms of delivering on its near-term financial goals and is confident in its ability to deliver improved performance and shareholder value,” Tronc said.
Tronc released its third-quarter earnings report after the market closed Tuesday, with revenues declining 6.8 percent to $378 million. Advertising revenue was down 10.9 percent from the same quarter last year.
Tronc shares closed down 12 percent Tuesday at $10.54. Gannett closed down 2 percent at $7.59.
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