Gannett and Tronc shares tank on speculation deal is off
Shares of both Tronc and Gannett fell precipitously today on speculation that negotiations for a Gannett takeover may have collapsed.
Bloomberg News reported mid-afternoon that bankers who would have financed the deal have gotten cold feet — figuring both companies are overvalued.
Trading of Tronc shares was briefly suspended after that, then resumed. For the day, Tronc closed down 27.8 percent and Gannett, 17.1 percent.
As I reported earlier in the day, the sell-off at both companies began developing after Gannett's disappointing third quarter earnings report.
Analyst Ken Doctor, who has been closely tracking the negotiations deal, reported that a Tronc board meeting Wednesday afternoon, at which the latest Gannett offer was to have been considered, was abruptly cancelled.
Gannett first offered $12.25 cents a share in a takeover bid in late April, a big premium over the share price the previous Friday of $7.52. Gannett has since raised its offer to $15 a share. Both Bloomberg and Doctor have reported the terms under recent discussion was for more than $18 a share.
I wrote in a post Wednesday that the deal made financial sense for both sides. But Tronc chairman Michael Ferro first resisted and has more recently delayed. He may have been bargaining Gannett's offer up or clinging to the chance to execute his own strategy for Tronc, which owns the Los Angeles Times, the Chicago Tribune and nine other properties.
Now the window seems to be closing or have closed for getting the acquisition done.
Neither company had immediate comment on the stock or the status of the negotiations. We will update this post if they do so later.