Newspaper chain Gannett has been trying for months to acquire what used to be Tribune Media, now known as Tronc, but the company has so far rebuffed all attempts to reach a deal. Undeterred, Gannett has made a new and more lucrative offer for the chain, according to a report in the Wall Street Journal.
There are few details available about the new bid, except that it is higher than the previous $15-a-share offer that Gannett (GCI) made in April. The company initially offered Tribune $12.25 a share or about $400 million—a 67% premium to the existing share price—and then boosted it after Tribune balked.
Unlike Gannett’s previous attempts, which were conducted in public with multiple press releases, the Journal says the latest offer was made privately, and Tronc is expected to respond by the end of the week.
Gannett’s initial offer set in motion an often bizarre series of events at Tribune Publishing, which was acquired by Chicago-based entrepreneur Michael Ferro in January. Ferro, who became wealthy through investments in e-commerce and medical technology, at one point also owned a stake in the Chicago Sun-Times.
After rejecting the Gannett acquisition deal, Tribune renamed itself Tronc (which is short for “Tribune online content”) and released a jargon-filled strategy document and video about how Ferro planned to reinvent the newspaper chain, which owns the Los Angeles Times and the Chicago Tribune.
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Tronc also sold a portion of the company to Patrick Soon-Shion, an L.A.-based billionaire who made his fortune selling medical equipment, but also claims to have invented a “machine vision” technology that will help Tronc bridge the gap between its print newspapers and the online world.
Despite Ferro’s bluster about how Tronc can go it alone (he at one point suggested that Tronc might acquire Gannett), the company is under a significant amount of pressure from shareholders—including venture fund Oaktree Capital Management, which owns 13% of the stock—to accept a takeover bid.
Gannett, meanwhile, remains interested in Tronc because its model is based on scale. In effect, it needs to own as many leading newspaper titles as possible in order to reduce its costs and boost its ad revenue.
While their brands have declined somewhat in recent years, the LA Times and Chicago Tribune would still make valuable additions to that model and potentially provide synergies for Gannett’s national paper, USA Today. Whether a higher bid is going to be received any more favorably by Ferro and the Tronc board is anybody’s guess, however.
