Tribune Publishing CEO Justin Dearborn this morning disclosed a surprise offer from Gannett newspapers to buy the parent of the Los Angeles Times. Tribune's official stance is neutral on the offer, I guess while they size it up. The offer is for $815 million, or $12.25 share, USA Today reports, which would be considerably more than the newspapers seem to be worth on the market. “What we’re hoping for is to sit down with Tribune’s board and work out a transaction. We’re confident that, with cooperation between the companies, we can complete due diligence in a very timely fashion and execute an agreement,” Gannett CEO Robert Dickey said.
Tribune Publishing so far is neutral but has to listen. Here is Dearborn's memo to the staffs:
Date: April 25, 2016 at 05:15:59 PDT
Subject: CEO Update
I want to update you on a recent development. A few moments ago we issued the attached press release, which details that we received an unsolicited proposal from Gannett to acquire Tribune Publishing for $12.25 per share in cash.
I want to be clear that we did not seek or encourage this proposal and the Board has not been trying to sell the Company. However, as a public company, our Board is obligated to evaluate any proposal of this nature and we take this responsibility seriously. The Board is thoroughly evaluating the proposal in consultation with our independent financial and legal advisors, and will respond to Gannett promptly. The Company is committed to acting in the best interests of shareholders.
As you know, we are engaged in a significant transformation of the Company. We are focused on delivering relevant and impactful journalism that reaches the largest global audience, using innovative technology and leveraging that content to drive transactions for our partners using sophisticated tools and analytics.
In a few short months, we have made important progress. We’ve implemented a new organizational structure to increase agility and drive innovation while focusing on driving efficiencies and reducing costs. We added new talent with expertise in technology and key industry verticals such as real estate to identify and drive customer transactions. With a focused strategy and an unmatched collection of award-winning content and brands, we are well-positioned to create value for our shareholders.
The most important thing we can do right now is to focus on great journalism and informing the communities we serve. We appreciate the continued hard work and commitment of all of our employees.
If you receive any media inquiries, please direct them to Dana Meyer at email@example.com.
We appreciate the continued support and dedication of all of our employees.
Over at Poynter, former Chicago Tribune writer and editor James Warren frames it as a potential battle in the context of Gannett's Joanne Lippman being in acquisition mode, and Tribune Publishing being a sinking company.
Tribune Publishing's ambition to build global brands would seem to run smack into the obvious, well-crafted Gannett strategy to be the leader in consolidating the industry, finding efficiencies on the business side and creating a so-called USA TODAY network on the editorial side that exploits the journalism of individual newsrooms for many of their other newsrooms....
As [Gannett] plotted its longterm strategy, it also hired Joanne Lipman, a respected former deputy managing editor at The Wall Street Journal and founder of the editorially impressive but ultimately failed Condé Nast Portfolio magazine, was notable.
Lipman is seeking to oversee "all all content and content-related business" at the newspaper publisher. Adding The Los Angeles Times, Chicago Tribune, Baltimore Sun and eight other papers to her corporate portfolio would be a potent addition if one can smartly find editorial synergies (a quest that at times has flummoxed other companies).
While she focused on a lot of editorial possibilities, the company also zeroes in on cost savings in many areas, especially on the business side. So perhaps even before reporters and editors get nervous about consolidation, recent Gannett history would suggest that personnel in departments like human resources have greater cause to rework their resumes.
But, for now, any battle plan Lipman might have with what could be a goldmine of new talent is ancillary to what may be a boardroom — and even courtroom — fight.
*Update: Ken Doctor weighs in at Politico with the analysis that it's "an unprecedented hostile offer" Tribune Publishing's new non-executive chairman, Michael Ferro, likely can't refuse. And just when he was starting to enjoy this new toy that lets him go to the Oscars and hobnob in LA with politicians and celebs. From Doctor:
For Ferro — whose early tenure has been marked with grandiose pronouncements about reinventing Tribune and the beleaguered newspaper industry — the offer comes as both a major setback to his ambition, and one pleasing to his wallet. Ferro’s quick profit would come to more than $20 million on his $44.4 January investment.
Tough as that may be to resist, Ferro seems to oppose the offer.
But given the large premium (and Dickey’s now publicly stated goal of a sit-down with the full board), it will be tough to defend (and there is considerable risk of a shareholder suit if the deal is rejected).
Tribune Publishing, of course, has been reeling for a long time. Since split-off from Tribune Company in summer of 2014, the company has been overmatched by the challenges of turning around the U.S. third largest newspaper publisher. It has seen one CEO, Jack Griffin, depart, along with several of his top turnaround executives, and its share price plummet from an initial $35 to as low as the $5 range.
And the seemingly outsized premium represented in this deal will likely only go up, as Gannett sweetens its offer. In addition, there’s also the possibility of other bidders, perhaps private equity ones, like Apollo Global Management, that have recently tried to enter the business — and may want to forestall the possibility of Gannett further consolidating its nationwide hold on the business.