Gannett Co.’s long-awaited takeover of Tronc might not happen, with the banks that were to finance the merger having backed out, according to Bloomberg.
Citing sources familiar with the matter, Bloomberg reports that several lenders withdrew over concerns about the health of the two companies’ businesses at the agreed-upon $18.75-per-share price.
“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,” Gannett CEO Bob Dickey said on an earnings call Thursday when asked about the takeover. “We’re not going to add properties for the sake of adding properties.”
Shares of both Gannett and Tronc fell significantly on Thursday. Bloomberg reports that talks are still ongoing as both parties are “in the hopes of salvaging the effort to merge.”
Tronc’s sizable portfolio includes The Chicago Tribune, The Los Angeles Times, The Orlando Sentinel, The Sun-Sentinel of South Florida, The Baltimore Sun, The Morning Call of Eastern Pennsylvania, The Hartford Courant and The San Diego Union-Tribune.
Gannett, the parent company of USA Today, started the months-long negotiation by making a unsolicited offer that was rejected by Tronc, referred to then as Tribune Publishing, last April. Things got ugly and Gannett even penned a letter to Tribune shareholders accusing the company’s leadership of “disregarding” their best interests.
In early August, the Wall Street Journal reported that Gannett increased its offer to purchase Tronc after months of unsolicited offers were rejected by Tronc chairman Michael Ferro. Gannett’s original offer of $12.25 a share was increased to $15 per share, but Tronc rejected both efforts.
At one point, Ferro told a group of Los Angeles Times staffers that he would purchase Gannett instead of accepting Gannett’s takeover offer.
Earlier this week, Gannett announced it would lay off 2 percent of the company, which is roughly 350 employees.