Source: Gannett-Tronc deal in doubt as banks withdraw funding
Banks financing Gannett Co.'s potential takeover of Tronc Inc. (Chicago Tribune) have backed out, according to people familiar with the matter, putting a merger of the newspaper companies in doubt.
Gannett and Tronc had agreed to a deal price of about $18.75 a share, but several lenders withdrew over concerns about the health of the two companies' businesses at that valuation, said the people, who asked not to be identified because the discussions are private. Talks between Gannett and Tronc on a deal are still ongoing, with both hoping to salvage their efforts to merge, said the sources.
Gannett, the owner of USA Today, has been trying to buy Tronc for months to create a company with the scale to compete more aggressively with online news sites for national readers and advertisers. A deal would marry Gannett's portfolio of more than 100 dailies and 1,000 weeklies with Tronc's Los Angeles Times, Chicago Tribune, San Diego Union-Tribune, Baltimore Sun, Orlando Sentinel and other publications.
Gannett had made two previous offers - one in April for $12.25 a share and a second in May for $15 a share. Tronc's board rejected both as too low and not in shareholders' best interests. Chairman Michael Ferro renamed the Chicago-based newspaper chain, formerly known as Tribune Publishing, amid the hostile takeover attempt.
On an earnings call Thursday morning, Gannett CEO Bob Dickey declined to comment on the Tronc talks but said its plans for acquisitions depend on whether the financing "make sense."
"It all comes down to making sure that these are accretive for our shareholders and add value and that the financing terms make sense for the company," Dickey said. "We're not going to add properties for the sake of adding properties."
Gannett and Tronc declined to comment.