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Gannett offers to buy Tribune Publishing for about $388.3 million

For the second time this year, Chicago's largest newspaper is in the center of the news as newspaper publishing giant Gannett Monday announced a bid to buy Chicago-based Tribune Publishing for more than $388 million.

The offer comes just two months after Tribune Publishing accepted a $44 million investment from Merrick Media, controlled by investor Michael Ferro Jr. The move gave the former owner of the rival Chicago Sun-Times a controlling stake in the company.

Virginia-based Gannett said it would offer $12.25 in cash for each Tribune share, a 63 percent premium to Tribune's Friday closing price of $7.52. Gannett valued the total deal at about $815 million, which includes about $390 million of debt. But the company also said Tribune has refused to begin "constructive discussions" about a deal since it first offered to buy the company earlier this month. CEO Robert Dickey talked about a possible deal with both Ferro and Tribune CEO Justin Dearborn, Gannett said.

Tribune confirmed Monday that it received the unsolicited offer and said it "will respond to Gannett as quickly as feasible."

Gannett, which owns USA Today and is the largest U.S. newspaper publisher by daily circulation, has been expanding its reach around the U.S., most recently acquiring 15 newspapers, including the Knoxville News Sentinel and the Milwaukee Journal Sentinel, from the Journal Media Group.

Tribune Publishing, meanwhile, has also been looking to enlarge its portfolio, acquiring the San Diego Union-Tribune last year. But the company was thwarted in an attempt earlier this year to buy two newspapers from Freedom Communications - including the suburban Los Angeles-based Orange County Register - after the U.S. Justice Department angled to block the acquisition on competitive grounds.

In addition to the Chicago Tribune, Tribune Publishing has 10 other newspapers, including the Los Angeles Times, the Orlando Sentinel, The Baltimore Sun and the Hartford Courant.

Gannett and Tribune have little overlap in large markets, which could help win regulatory approval.

Beyond USA Today, however, Gannett does not own properties in highly competitive major metropolitan markets like Chicago or Los Angeles.

"It does set up the option of them selling the L.A. Times or Tribune to local buyers," said Rick Edmonds, media business analyst for industry think tank Poynter Institute in St. Petersburg, Fla. "That could make the deal even bigger for them."

However, Edmonds notes a Gannett-Tribune deal is a good fit in Gannett's overall strategy of growing its footprint across the country. While previous Gannett acquisitions have led to local staffing cuts, he also said the company's resources and consolidations can free up local journalists to work on community-specific projects.

"You can free up local reporters to work on things and not have to worry about putting together the sports pages," he said.

It's has been a busy year at Tribune Publishing. Shortly after Ferro's company acquired a controlling stake, CEO Jack Griffin was pushed out and replaced by Dearborn, and the company reorganized its corporate structure, giving its newspapers' editors dual roles as editors-in-chief and publishers. Longtime Chicago Tribune Editor Gerould Kern also retired following Ferro's move in February, and was replaced by former editorial page editor R. Bruce Dold.

• Associated Press and Bloomberg News also contributed to this report.

Newspaper publisher Gannett wants to buy rival Tribune Publishing in a deal that would give the owner of USA Today control of the Chicago Tribune, the Los Angeles Times and several other newspapers. Associated Press file photo
Pedestrians walk past the Los Angeles Times building in downtown Los Angeles. Associated Press file photo

At a glance

<b>GANNETT</b>Headquarters: McLean, Va.

2015 revenue: $2.89 billion

Flagship: USA Today

Other papers: More than 120 in the U.S. and U.K. including The Arizona Republic, Detroit Free Press, The Tennessean and The Des Moines Register.

Recent moves: Gannett moved all its TV companies into a separate company, Tegna, last summer. It acquired Journal Media Group for $280 million in April, giving it newspapers including the Milwaukee Journal Sentinel and The Commercial Appeal in Memphis, Tenn.

<b>TRIBUNE PUBLISHING</b>Headquarters: Chicago

2015 revenue: $1.65 billion

Flagship: Chicago Tribune, Los Angeles Times

Other papers: 11 dailies including Los Angeles Times, Baltimore Sun, Orlando Sentinel, Hartford Courant, Spanish language newspapers Hoy and El Sentinel

Recent moves: Reorganization to lead each newspaper with a dual editors-in-chief and publisher. In February, Tribune named Justin Dearborn as its new CEO, replacing Jack Griffin less than two years after he joined the business.

Source: Associated Press

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