Gannett Abandons Effort to Buy Newspaper Publisher Tronc

2016-11-01 12:52:14

 

Gannett Abandons Effort to Buy Newspaper Publisher Tronc

After six months of pursuit, the Gannett Company said Tuesday that it was withdrawing its offer to acquire the owner of The Los Angeles Times and The Chicago Tribune, a deal that would have extended Gannett’s national footprint and furthered consolidation in the newspaper industry.

Gannett, the publisher of USA Today, had made several efforts to acquire the former Tribune Publishing Company, now known as Tronc. The first two were rejected during the spring.

In a terse statement released Tuesday morning, Gannett said it “has determined not to pursue an acquisition of Tronc.’’

The dissolution of the deal represents by turns a victory and a failure for Michael W. Ferro Jr., a technology entrepreneur who in February took a $44 million stake in Tribune Publishing and became its executive chairman. Mr. Ferro had been determined not to sell Tribune to Gannett, instead promoting a technology-driven approach, with concepts like artificial intelligence, that he said would increase the value of the company beyond Gannett’s offer.

In June, he changed the company’s name to Tronc, which stands for Tribune Online Content, and moved the stock listing to the Nasdaq Stock Market from the New York Stock Exchange to make it seem more like a dot-com-era technology start-up.

However, by allowing Gannett to walk away, Mr. Ferro risks a backlash from some of the company’s largest investors, which had been urging him to sell the company. The shares have been trading around $17 on the expectation that a deal would be signed around that level. Gannett’s stock price has done the reverse, slumping around 40 percent since its offer was first disclosed, making the deal more difficult to justify to its own investors.

In April, Gannett made public an offer of $12.25 a share for Tribune Publishing. In rejecting the bid, Justin C. Dearborn, the company’s chief executive, said at the time that the execution of its “stand-alone strategic plan will generate shareholder value in excess of Gannett’s proposal.”

Gannett proceeded to sweeten its offer to $15 a share. Mr. Ferro and the board rejected that proposal as well, gaining some firepower in the form of an investment by Nant Capital, founded by Dr. Patrick Soon-Shiong, a billionaire doctor who has started several health care companies. Dr. Soon-Shiong became vice chairman as part of his investment.

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