Tribune Publishing sold to hedge fund in $630M deal

Tribune Publishing, publisher of the South Florida Sun Sentinel and other major newspapers, has agreed to be acquired by Alden Global Capital in a deal valued at $630 million.

Announced Tuesday after the stock market closed, the deal would create one of the largest newspaper operators in the United States. It follows weeks of negotiations between a special committee of Tribune Publishing’s board and Alden, a hedge fund with a history of deep cost-cutting at its other newspaper properties.

Alden, already Tribune Publishing’s largest shareholder with a 31.6% stake, is offering $17.25 a share for the remainder of the company in a transaction that would take Tribune Publishing private. That amounts to Alden paying about $431 million for the 68% of the shares it doesn’t already own.

The agreed-upon price is $3 a share higher than a nonbinding proposal Alden presented in December. Since its interest in buying all of the company was made public in late December, shares of Tribune Publishing have steadily moved higher. On Tuesday, shares closed at $15.97 a share, giving the company a market capitalization of $583.4 million.

In addition to the Sun Sentinel, Tribune Publishing owns the Baltimore Sun; the Chicago Tribune; the Hartford (Connecticut) Courant; the Orlando Sentinel; New York Daily News; the Capital Gazette in Annapolis, Md.; The Morning Call in Allentown, Pa.; the Daily Press in Newport News, Va.; and The Virginian-Pilot in Norfolk, Va.

As part of the deal, Alden signed a non-binding term sheet to sell the Baltimore Sun to Sunlight for All Institute, a public charity formed by Stewart Bainum Jr.

“Over the past year, the Company has taken a number of actions to adapt to an ever-changing business and industry environment, including the impact of COVID-19,” said Philip Franklin, board chairman and a member of the special committee. “These actions included strengthening the Company’s financial position, driving digital growth and investing in high-quality content to better serve customers, employees and communities. This positioning enabled the special committee to negotiate a premium, all-cash price, which the committee concluded was superior to the available alternatives.”

Tribune Publishing spokesman Max Reinsdorf declined to comment beyond the news release.

The deal, which the companies said should close in the second quarter, requires the approval of two-thirds of shareholders not affiliated with Alden and must pass regulatory scrutiny. It already has been approved by Tribune’s board. Three of the seven board seats are held by Alden representatives.

The deal’s success hinges on securing the votes of California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns about 24% of Tribune Publishing, and shareholder Mason Slaine, a former media executive who owns roughly 8%.

Soon-Shiong has not spoken publicly about Alden’s interest in buying the rest of the company or his intentions. Soon-Shiong, who built his initial stake in Tribune Publishing at $15 per share in 2016, owns about 8.7 million shares of the company.

In 2018, Soon-Shiong bought the Los Angeles Times and San Diego Union-Tribune for $500 million from Tribune Publishing, then briefly called Tronc.

Los Angeles Times has been grappling with its own issues since Soon-Shiong’s acquisition, including sharp revenue declines during the COVID-19 pandemic and the December resignation of executive editor Norman Pearlstine amid allegations of ethical lapses and inequity in the newsroom.

In December, Slaine, the former CEO of business information publisher Thomson Financial, told the Tribune he thought Alden’s $14.25 per share offer seemed too low. He owns about 2.9 million shares.

The deal comes as the newspaper industry continues to struggle in a digital media age. Revenue has been cut in half between 2008 and 2018 because of a precipitous decline in print advertising, according to data from Pew Research. During that same time, newsroom employment declined 25%.

Launched in 2007, Alden owns about 200 publications through an operating company known as MediaNews Group. Its larger newspapers include the Denver Post, San Jose Mercury News and the St. Paul Pioneer Press.

Alden acquired its stake in Tribune Publishing in November 2019, mostly through buying former nonexecutive chairman Michael Ferro’s holdings. In total, Alden purchased 11.5 million shares of Tribune Publishing for $145.4 million.

The hedge fund added two members to Tribune Publishing’s board at that time as part of a standstill agreement restricting it from buying additional shares.

In July, Tribune Publishing added Alden co-founder Randall Smith to its board and extended the standstill agreement until June 2021. While the agreement ostensibly prevented a hostile takeover, it did not preclude Alden from making a tender offer to buy Tribune Publishing, with board approval.