Paddock enters purchase agreement with Chicago Tribune

Paddock Publications, the parent company of the Daily Herald, on Thursday announced the sale of the newspaper to the Chicago Tribune.

According to a memo addressed to employees from the Paddock board of directors, many factors were considered in approving the sale, including the ongoing secular decline in the newspaper business, the need for future cost-cutting and the overall future trends in the industry. A closing is scheduled for June 22. Terms were not disclosed.

The Daily Herald has a 154-year history covering the suburbs of Chicago. The paper started in 1872 and was independently owned and run by four generations of the Paddock family. In 2018, Paddock family members sold their interest in the company to its employees and reorganized into an employee stock ownership plan (ESOP).

Paddock Publications has remained a profitable business while other newspapers have struggled, in part because of its actions to diversify the non-newspaper business after the Great Recession and economic collapse of 2008.

In its memo Thursday, the board noted the “long and arduous road,” beginning nearly a year ago with an unsolicited offer to purchase the newspaper assets by Shaw Media, headquartered in Crystal Lake. A special committee of the Paddock board was appointed to consider Shaw’s offer and the sale.

Due to a public disclosure requirement to Daily Herald employees under a new state law in Illinois, the Strengthening Community Media Act, the Tribune became aware that Paddock was considering the sale of the Daily Herald and ran a full-page ad in the Chicago Tribune expressing an interest in becoming the winning bidder.

In the end, the memo stated, the board determined that a sale to the Tribune was in the best interest of the ESOP participants. The board vote approving the sale was unanimous.

Paddock Publications Inc. will continue as an ESOP, focusing primarily on its non-newspaper niche publishing business, Town Square Publications, and also will continue to publish weekly newspapers in downstate Illinois.

Because Paddock Publications is owned by an ESOP, the board and the trustee were governed by their fiduciary obligations to shareholders and the organization, and believed the sale of newspaper assets would be in their best interests, according to the memo.

Paddock and the Tribune agreed to the transaction under the terms of an asset purchase agreement that was approved by the board Thursday. As an ESOP, all shareholders will be asked to vote on the sale prior to the closing.

The Daily Herald serves Cook, DuPage, Kane, Lake and McHenry counties.