Gannett Ends Bid to Acquire Tronc, Publisher of Chicago Tribune

Gannett will no longer pursue an acquisition of Tronc Inc., the company formerly known as Tribune Publishing that boasts a portfolio of award-winning newspapers such as The Chicago Tribune, The Baltimore Sun and The Los Angeles Times, the Virginia-based newspaper giant announced Tuesday.

Gannett President and CEO Bob Dickey wrote in a memo to employees on Tuesday that while the company has great respect for Tronc employees and properties and would have provided an "attractive opportunity" to expand the USA Today Network, the terms were not acceptable.

Executives at Tronc had aggressively been opposed to the acquisition, with Chairman Michael Ferro saying Gannett's bid undervalues Tribune.

In a statement, Tronc said that as it had noted previously, the company had serious doubts about Gannett's ability to finance a transaction that would be in the best interest of its shareholders and stakeholders. Tronc said the parties engaged in discussions regarding a potential transaction and reached a purchase price in mid-September but was informed by Gannett last week that its financing encountered an unexpected delay, putting the blame on the deal falling through on Gannett.

Below is Tronc's full statement:

“We were informed early this morning that Gannett has decided to abruptly terminate discussions regarding a potential business combination with tronc. As noted previously, tronc had serious doubts about Gannett’s ability to finance a transaction that was in the best interest of tronc’s shareholders and other stakeholders. Nonetheless, over the past several months, the tronc Board, management team and their advisors engaged in substantive discussions and due diligence with Gannett regarding a potential transaction, with an unwavering focus on creating value for tronc shareholders. The parties agreed to a purchase price in mid-September and subsequently worked to finalize a Merger Agreement. Last week, Gannett informed tronc that its financing encountered an unexpected delay. It is unfortunate that Gannett’s lenders made their decision to terminate their role in the transaction without the benefit of tronc’s third quarter financials or any future projections. tronc remained a constructive partner to Gannett as it sought to complete its financing for the agreed upon purchase price, however, Gannett was unable to do so and terminated discussions.

“The Board and management team of tronc remain committed to taking the necessary steps to transform its business in response to the massive changes that have overtaken the publishing industry, supporting the company’s outstanding journalists and, above all, delivering value to shareholders. tronc continues to make progress in implementing the company’s strategic plan to leverage technology and effectively monetize its world class content. The implementation of this plan will take time but the company remains on track in terms of delivering on its near-term financial goals and is confident in its ability to deliver improved performance and shareholder value.”

Goldman, Sachs & Co. and Lazard are acting as financial advisors and Kirkland & Ellis LLP is acting as legal advisor to tronc.

Poynter noted that Tronc's defense of its own good-faith negotiations with Gannett is significant since the company is facing multiple lawsuits from shareholders who have accused Tronc of neglecting its fiduciary duty. The Wall Street Journal reported that in private discussions, both companies had agreed to a purchase price of $18.75 a share in cash. Shares of Tronc fell, and Gannett's stock rose roughly 0.7 percent in wake of the news.

In June, the company changed its name from Tribune Publishing to Tronc, a company more focused on digital growth and monetization. The move was intended to provide incentive to reject Gannett's bid that was ultimately met with ridicule because of the name, "Tronc," and the subsequent promotional material the company released that contained a barrage of words that seemed to be a string of jargon with no coherent meaning.

Patch will update this report