Tribune Publishing Co (NYSE:TPUB) Stock Gains 52.93% on Gannett Offer

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Tribune Publishing Co (NYSE:TPUB) share prices are up 52.93% to $11.50 after Gannett Co. offered to buy the company for about $815 million.

Gannett Co (NYSE: GCI) owns USA TODAY and more than 100 other media properties across the country and has been expanding since spinning off from its former parent less than a year ago. CEO Robert Dickey wrote a letter to CEO of Tribune Justin Dearborn to offer to pay $12.25 per share, a 63% premium to Tribune’s closing stock price last Friday. This deal includes assuming $390 million of Tribune’s debt outstanding as of Dec. 31, 2015.

Tribune Publishing Co (NYSE:TPUB) owns Los Angeles Times, Chicago Tribune, and nine other daily publications. Gannett Co (NYSE: GCI) currently owns 107 local news organizations including the Cincinnati Enquirer, Detroit Free Press, Des Moines Register, Arizona Republic and Milwaukee Journal Sentinel.

Gannett’s offer price is around 5.6 times Tribune’s estimated 2016 earnings before interest, taxes and other items (EBITDA) and estimates $50 million a year in “synergies” savings.  “We believe Tribune shares the new Gannett’s unwavering commitment to journalistic excellence and delivering superior content on all platforms,” said CEO Dickey on Monday. “In this respect, the proposed combination of Gannett and Tribune would bring together two highly complementary organizations with a shared goal of providing trusted, premium content for the readers and communities we serve.”

So far, Tribune Publishing Co (NYSE:TPUB) has declined to begin formal negotiations, prompting Dickey to disclose the bid publicly. “The board is now engaged, with the assistance of its advisors, in a thorough review,” Tribune said in a statement on Monday. “The board is committed to acting in the best interests of shareholders and will respond to Gannett as quickly as feasible.”

Tribune can fill geographical gaps for Gannett with this deal while recuperating its losses from falling ad sales and its net loss of $2.8 million in 2015. Gannett plans to finance the deal through its $500 million line of credit and tapping the debt market in case additional funds are needed.

 

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