US publishing giant Gannett was a tad upset to not have been invited into negotiations with the board of Tribune Publishing after it made an unsolicited bid for the company two weeks ago.
“We are disappointed by the response we received from you,” Gannett CEO Robert Dickey wrote in a letter that was addressed to Tribune CEO Justin Dearborn and published in an April 25 press release. “We have determined that making your stockholders aware of our all-cash proposal is necessary, given Tribune’s attempts to delay constructive engagement.”
If stockholders were disappointed to have been kept in the dark about the offer until now, it was hard to tell. Shares in Tribune—the company owns the Los Angeles Times and Chicago Tribune, among other high-profile media properties—immediately skyrocketed, trading as high as 57% above their previous closing price and recouping about a third of the value they had lost over the last year.
The stock closed at $11.50, up 53% for the session. But it remains below Gannett’s cash offer of $12.25 a share to acquire the company, suggesting investors aren’t convinced that a deal—valued at about $815 million—is a foregone conclusion.
If completed, the acquisition would join two troubled newspaper giants that are more exposed than ever to the media industry’s mounting challenges. Within the last two years, both Gannett and Tribune Publishing were spun off from larger parent companies that wanted to keep their ailing newspaper businesses separate from stronger broadcast TV revenues.
Gannett’s revenue and circulation have fallen since it became a standalone business. Dickey hopes consolidating local publishing and growing Gannett’s digital footprint will put the company back on track.
“The financial and strategic logic of a combination of our two companies is clear,” Dickey wrote in his letter to Dearborn. “Gannett is uniquely willing and able to propel Tribune into the position of strength that will allow its beloved and historic publications and other assets to survive and thrive in this challenging environment.”
Gannett just completed a $280 million purchase of Journal Media Group, which owns the Milwaukee Journal Sentinel. And it isn’t the only newspaper operator looking to unite with rivals to better weather industry changes. In 2015, the US newspaper business had the greatest number of deals for the largest amount of money since the 2008 financial crisis, Bloomberg reported.