A Pair of Billionaires Outbids Alden Global Capital for Tribune Publishing

Will Alden Global Capital lose its bid to buy the legacy publisher?

Two months ago, Tribune Publishing accepted an offer by hedge fund Alden Global Capital to buy the company for $630 million in cash. The deal included most of Tribune’s holdings including The Chicago Tribune, The (New York) Daily News, Orlando Sentinel, Sun-Sentinel, (Virginia) Daily Press, The Virginian-Pilot, The Morning Call (Lehigh Valley, Pennsylvania) and the Hartford Courant. The Baltimore Sun was omitted from acquisition talks, so that billionaire businessman and philanthropist Stewart Bainum Jr. could buy the newspaper through the nonprofit Sunlight for All Institute.

Competing bid is $50M higher

Two months later, and there is a better deal on the table. Bainum has teamed up with billionaire philanthropist Hansjörg Wyss to form a company called Newslight, reports The New York Times, who has made an offer of $680 million. Newslight’s offer is valued at $18.50 per share, while Alden Global Capital’s offer is $17.25 per share. The Times says that Tribune Publishing will discuss a possible deal with Bainum and Wyss in good faith, but it is not ready to terminate the agreement with Alden at this time.

On Monday, Tribune Publishing made a statement, after consulting with its legal and financial advisors, saying the cash offer by Newslight could “reasonably be expected to lead to a ‘Superior Proposal.’”

“The acquisition proposal from Newslight is fully financed by equity commitments from Mr. Bainum and Mr. Wyss, and remains subject to certain conditions, including completion of due diligence and negotiation of definitive documentation,” Tribune said.

Special committee to consider new proposal

“The special committee's determination allows Tribune to engage in discussions and negotiations with, and provide diligence information to, Newslight and its principals in connection with their proposal, but does not allow Tribune to terminate the Alden Merger Agreement or enter into any merger agreement with Newslight, Mr. Bainum or Mr. Wyss,” added Tribune.

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The special committee will go back to the board room to evaluate the proposals, with the assistance of their financial and legal advisors, to determine the best outcome for Tribune and its stockholders.

It ain't over til its over

“There can be no assurance that the discussions with Newslight and its principals will result in a binding proposal, that the special committee will determine that any such proposal constitutes a “Superior Proposal” or that a transaction with Newslight will be approved or consummated on any particular terms or at all,” said Tribune.

Unless or until the Tribune board determines that Newslight’s proposal is superior, Alden’s merger agreement is still in “full force and effect” and is still recommended by the board. Even with the full support of the board, stockholders must approve either deal. As we noted on April 1, Dr. Patrick Soon-Shiong, owner of the Los Angeles Times, is the second largest shareholder of Tribune Publishing with a 24% stake. Soon-Shiong owns enough stock to block either deal on his own.

Insider Take

What boils down to one of two things: Tribune Publishing’s desire to provide its stockholders with the best value possible for their investment and their commitment to journalism in the communities it serves. Alden, whose bid is now $50 million lower than Newslight’s, has a reputation for acquiring newspapers and gutting them to turn a profit. Bainum and Wyss, on the other hand, are more interested in maintaining a “robust press” and saving legacy newspapers like the Chicago Tribune. Unless Alden beats Newslight’s bid, it seems foolish for Tribune Publishing to move forward with that merger, but stranger things have happened.