Gatehouse-Gannett merger creates largest US newspaper company

NEW YORK — Two of the country’s largest newspaper companies have agreed to combine in the latest media deal driven by the industry’s struggles with a decline in printed editions.

GateHouse Media, a chain backed by an investment firm, is buying USA Today owner Gannett Co. for $12.06 a share in cash and stock, or about $1.4 billion. The combined company would have more than 260 daily papers in the U.S. along with more than 300 weeklies. It would be the largest U.S. newspaper company by far, with a print circulation of 8.7 million, 7 million more than the new No. 2, McClatchy, according to media expert Ken Doctor.

The companies said Monday that the deal will result in up to $300 million in annual cost savings and help speed up a digital transformation.

Both GateHouse and Gannett are known as buyers of other papers. Bulking up lets companies cut costs — including layoffs in newsrooms — and centralize operations.

GateHouse’s owner, New Media, is taking on new debt to get the deal done — a $1.8 billion loan from private equity firm Apollo Global Management, which will have to be paid back.

Several experts said they do not expect the Justice Department to have an issue with the deal, as the two companies have papers in different markets. The companies expect the deal to close this year.

The combined company would take the Gannett name and keep its headquarters in Gannett’s home of McLean, Virginia.

Consolidation is nothing new to either company. Gannett’s last big U.S. print purchase was in 2016, when it bought papers in the Journal Media Group chain for $280 million, including the Milwaukee Journal Sentinel and The Commercial Appeal in Memphis. Gannett also owns dailies in major cities such as the Detroit Free Press and Arizona Republic.

Its more recent merger efforts have been unsuccessful. It failed in an unsolicited bid for newspaper chain Tribune. Gannett then fended off an unwanted bid by MNG Enterprises, better known as Digital First Media, a hedge fund-backed media group with a reputation for cutting jobs and letting papers wither.

GateHouse, a littleknown name to U.S. readers, is also controlled by an investment company, but it doesn’t have the same reputation as Digital First. It is owned by the publicly traded New Media Investment Group, which is managed by investment firm Fortress Investment Group. Fortress, in turn, is owned by Japanese tech giant SoftBank. Gannett and New Media said Monday that Fortress will no longer manage New Media after 2021.

GateHouse publishes 156 daily newspapers, most in small- and mid-sized towns.