March 24, 2021

Tribune Publishing has taken another step down the road to being owned by hedge fund Alden Global Capital.

A special committee that is screening proposals decided that Alden’s firm bid of $17.25 a share was preferable to a tentative bid of $18.50 a share from hotel chain CEO Stewart Bainum Jr. that does not have committed financing.

The special committee’s recommendation was contained in a filing with the Securities and Exchange Commission Tuesday evening.

The situation is still fluid. Bainum could present a full financing plan in coming days, or he could up his bid. Alden too could increase its offer.

The stock market seems to be betting a deal will go through, perhaps at a higher price — Tribune shares were trading a bit above $17.25 midday Wednesday. The deal values Tribune at $630 million, but that is somewhat misleading because the company has no debt and about $200 million of cash in hand.

The draft proxy filing with the SEC envisions a virtual shareholders meeting in the near future, though a date is not specified. If regulators sign off, a final proxy will be filed and the vote scheduled. Tribune has said that it expects the transaction to close by the end of the second quarter.

Technically, the offer is for the 68% of shares Alden does not own already. For approval, it requires a two-thirds majority vote of non-Alden shareholders.

The proxy includes a narrative of negotiations with some previously undisclosed details:

  • The company received an inquiry from a local group looking to buy The Hartford Courant. A different group asked to submit a preliminary bid for The Morning Call of Allentown, Pennsylvania. Neither discussion went further.
  • Alden has indicated that it would vote against Bainum’s bid had it been recommended by the special committee (all independent directors not affiliated with Alden). In turn, that would likely delay the timetable for any transaction.
  • The first merger discussions with Alden began in early 2020, then were tabled in light of business uncertainty related to the COVID-19 pandemic. They resumed in the fall.

Alden’s MediaNews Group runs its properties — which include The Denver Post and two groups of dailies in California — with minimum investment in newsrooms or new technology.

Should its bid succeed, deep cuts would be expected at Tribune outlets including the flagship Chicago Tribune, the New York Daily News, the Orlando Sentinel, the Sun-Sentinel of South Florida and The Virginian-Pilot in Norfolk.

The NewsGuild, which has chapters at most of those properties, has opposed an Alden deal but so far has not found a way to stop it.

Bainum, whose Choice Hotels is based in Maryland, entered the picture late last year with an offer to buy just The Baltimore Sun for $65 million once Alden took over. That side deal may have hit a snag because Bainum’s group objects to Alden’s insistence that the Sun contract for various services that are now consolidated at Tribune over a period of five years.

Should Alden succeed and take Tribune private, the only remaining publicly traded U.S. newspaper companies would be Gannett, The New York Times Co., Lee Enterprises and A.H. Belo. (The Wall Street Journal is part of, but only a part of, News Corp.)

Alden has taken a 13% position in Lee, marking it as a potential future takeover target.

McClatchy, roughly the same size as Tribune Publishing, came to be owned by hedge fund Chatham Asset Management in mid-2020 after filing for federal bankruptcy protection.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
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