Chicago-based Tribune Publishing on Tuesday announced plans to sell to hedge fund Alden Global Capital in a deal valued at $ 630 million.
Already the largest shareholder of Tribune Publishing with a 31.6% stake, Alden Global Capital aims to consolidate ownership of historic newspapers such as the Chicago Tribune, New York Daily News, Hartford Courant, Virginian-Pilot, Orlando Sentinel and South Florida Sun-Sentinel.
The Los Angeles Times and San Diego Union-Tribune were part of Tribune Publishing until 2018, when Los Angeles biotech entrepreneur Dr. Patrick Soon-Shiong and his wife, Michele, rescued both newspapers in the part of a $ 500 million deal. The Soon-Shiong family purchase returned The Times to local control after more than a decade of upheaval and steep cost cuts, while under the management of Tribune Publishings.
Soon-Shiong retained its stake in Tribune Publishing and is currently the company’s second largest shareholder with 24%. It acquired its initial stake in Tribune Publishing at $ 15 a share in 2016.
Alden Global Capitals’ proposed takeover of Tribune is based on the backing of Soon-Shiongs as well as the approval of another major Tribune shareholder, Mason Slaine, who owns approximately 8% of the company. Holders of two-thirds of Tribune’s non-Alden common stock must approve the sale.
Soon-Shiong declined to comment on Tuesday evening, saying he wanted to review the details of the deal.
Alden Global Capital is one of the largest publishers in the country, with a major presence in California. He owns the majority stake in MediaNews Group, which owns the Orange County Register, the Los Angeles Daily News, the Long Beach Press-Telegram, the Riverside Press-Enterprise, the San Bernardino Sun, and the San Jose Mercury News. His other newspapers include the Denver Post and the St. Paul Pioneer Press.
The company has a reputation for cutting costs and laying off hundreds of journalists. Alden Global Capital gained notoriety in 2018 when a revolt in Denver resulted in Opinion editors posting a call to readers: Editorial: As vultures circulate, The Denver Post must be saved.
The struggling newspaper industry has been gripped by hedge fund mergers and takeovers in recent years. These measures reflect the bad luck of newspapers, which have witnessed a dramatic migration of readers and advertisers to tech giants, including Google and Facebook. The past year has been particularly brutal for the newspaper industry, as coronavirus home support orders have further decimated advertising spending.
Our commitment to ensuring the sustainability of strong local journalism is well established and it is part of that effort, Alden Global Capital said in a statement Tuesday.
The hedge fund first announced its intentions in a Letter of December 14, offering Tribune shareholders $ 14.25 per share for the share that the company does not already own valuing the transaction at $ 520.6 million. Negotiators representing the Tribune Publishings board of directors have spent the past six weeks negotiating more favorable terms.
The deal announced Tuesday offers $ 17.25 per share in cash for shares the company does not already own. This represents a 21% increase over the December offering and a 35% premium over the closing price of Tribunes common stock on December 30, 2020, when Alden Capitals’ interest became known. Tribunes’ board of directors has approved the sale.
Tribune Publishing has not set a date for its shareholder vote. The agreement must also authorize a federal antitrust review.
Tribune Publishing has suffered since the 2007 leveraged buyout by real estate mogul Sam Zell. Struggling with nearly $ 13 billion in debt, the company plunged into bankruptcy, only to emerge in 2012 with private equity funds in charge.
Among other things, Tribune has sold its most valuable real estate, including the iconic Tribune Tower in Chicago and the historic Times headquarters in downtown Los Angeles. The private equity firms split the business into two parts, and entrepreneur Michael Ferro took a controlling stake in publishing the business. Ferro sold its stake to Alden Global Capital.
Of the Tribune newspapers, only the Baltimore Sun will not be included in the deal. The company said it would be purchased separately by the Sunlight for All Institute, a public charity formed by Stewart Bainum Jr., president of Choice Hotels International.
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