Tribune Publishing has thrown out Gannett’s offer to buy it

Fred Prouser/Reuters

Tribune Publishing has thrown out Gannett’s offer to buy it for $815 million.

In a statement Wednesday, Tribune, whose titles include the Los Angeles Times, said its board unanimously rejected what it called Gannett’s “opportunistic” offer.

“The board believes that the price reflected in the proposal understates the company’s true value and is not in the best interests of our shareholders,” Tribune CEO Justin Dearborn wrote in a letter to Gannett.

Gannett publicized its proposal to buy Tribune for $12.25 a share in cash on April 25.

Tribune shares jumped 4% in after-hours trading. The company also reported first-quarter results that showed it swung to a loss totaling $6.5 million.

And that’s probably why Gannett, the publisher of USA Today, wants to buy Tribune. Gannett chairman John Jeffry Louis had said the combined firm would help his publications but would also help Tribune thrive in a “challenging environment” for the newspaper industry.

Here’s the full letter Tribune sent to Louis and CEO Robert Dickey:

Dear Messrs. Louis and Dickey:

The Board of Directors of Tribune Publishing Company (the “Company”) has carefully reviewed, with the assistance of its financial advisors, Goldman, Sachs & Co. and Lazard Frères & Co. LLC, and its legal advisor, Kirkland & Ellis LLP, your unsolicited proposal, as set forth in your April 12, 2016 letter and subsequent correspondence, for Gannett Co., Inc. to acquire all of the outstanding shares of the Company for $12.25 per share in cash (the “Proposal”). As we offered on April 24, we are sharing the Board’s position promptly following our earnings announcement.

Consistent with its fiduciary duties and past practices, the Board is always open to evaluating any credible proposal that the Board reasonably believes, in good faith, to be in the best interests of the Company and its shareholders.

After thorough consideration, the Board has unanimously concluded that it is not prepared to engage with Gannett about a combination of our companies based on the value you indicated in the Proposal. The Board believes that the price reflected in the Proposal understates the Company’s true value and is not in the best interests of our shareholders. In order to provide you some context for this conclusion, we have attached Exhibit I, which clearly indicates the opportunistic nature of the $12.25 offer and sets the record straight on the actual EBITDA multiple in the Proposal.

Tribune Publishing is in the very early stages of an exciting and compelling strategic transformation. Today we announced full-year 2016 Adjusted EBITDA guidance of $166-172 million and a plan to drive increasing monetization of our important brands, capitalize on the global potential of the LA Times, and significantly accelerate our conversion of content to revenue through an enhanced digital strategy. The Board is confident in our ability to generate shareholder value in excess of Gannett’s opportunistic proposal through our focused execution of this standalone plan. The Board has evaluated the Proposal in this context and concluded that it is not a basis for further discussion.


Justin C. Dearborn, on behalf of the Board of Directors