Papers in the bag
Gatehouse strikes $1.4B Gannett deal
The nation’s largest newspaper chain just got a whole lot bigger.
The parent of the nation’s second-largest newspaper company, Gatehouse Media, has struck a $1.38 billion agreement to acquire USA Today publisher Gannett in a cash-and-stock deal.
The merger, which would combine Gannett with Gatehouse’s publicly traded New Media Investment Group, was formally unveiled Monday following months of negotiations. It calls for Gannett’s shareholders to receive $6.25 in cash and 0.5427 worth of New Media shares for each share of Gannett.
With assumption of Gannett debt, Apollo Global Management will supply all $1.792 billion in financing, which one source told The Post was at a sky-high 11.5 percent interest rate.
The deal to merge Gatehouse with Gannett — already the biggest newspaper chain in the country in terms of circulation — will form a behemoth that will operate more than 250 daily papers, or one-sixth of all newspapers in the country. The company will retain the Gannett name and the company’s McLean., Va., headquarters.
Locally, Gannett owns northern NJ’s Record and the Journal News in NY’s Westchester and Rockland counties. Gatehouse owns mostly smaller papers.
One of the big winners in the deal is Fortress Capital, which took Gatehouse through a bankruptcy in 2013 that shed most of its debt. New Media’s CEO Mike Reed then gobbled up small US newspaper companies.
Fortress reaped lucrative management fees along the way — to the tune of $21.8 million in 2018.
Under terms of the agreement, the fee deal will sunset in two years.
“It’s interesting that Gannett never declared bankruptcy but it is Gatehouse that is buying them,” noted Ken Doctor, whose Newsonomics column predicted the deal would be unveiled on Monday.