Gannett Co Inc (NYSE:GCI) shares were down 1.98% to $13.35 after it entered an agreement to acquire ReachLocal for $4.60 per share in cash. The transaction has been unanimously approved by the boards of directors of both companies and is expected to be completed by the third quarter of the year, amounting to a total enterprise value of around $156 million in cash.
Gannett Co has a market cap of $1.49 million at 116.53 million shares outstanding. Shares have been trading in a 52- week range of $10.75 to $17.91. With this deal, Gannett hopes to use ReachLocal in expanding its digital revenue by roughly 50%.
The acquisition of ReachLocal accelerates Gannett’s digital growth strategy, adding more than $320 million of annual digital revenue, the best digital marketing solutions technology in the market, and an outstanding and well-respected management team to Gannett’s digital business,” said Gannett CEO Robert Dickey.
He added that ReachLocal’s focus on local small businesses aligns with Gannett’s plan to reach to new local markets. The deal is expected to be neutral in terms of earnings per share in the first year then accretive in the second full year, as the publishing company strives to stay relevant in a constantly evolving digital age.
We are excited to bring new market opportunities and scale to Gannett’s growing and important digital business. We believe that this powerful combination will drive growth and allow us to accelerate innovation, enabling the best and most complete digital marketing solutions in the market today,” shared ReachLocal CEO Sharon Rowlands.
This has been an observed trend among publishing companies these days, with the New York Times recently acquiring digital market agency HelloSociety. In 2014, Tribune bought entertainment data and technology provider GraceNote.
Gannett is a an international, multi-platform news and information company which owns more than 100 daily newspapers in the US and has recently announced a split with its television assets to be able to focus on the online publishing market.
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