KR l Two parties weighing a bid
these first expressions of interest may include an estimate of what a buyer might pay, anyone who expresses an interest is not committed to actually making a final bid for the company. In a typical buyout deal, the investment bank would screen bidders to decide who should proceed in the process.
‘‘ Given the softness of the advertising markets across the country, I’m not sure anyone is really ready to step up and bite off a big chunk like Knight Ridder,’’ said Gannett director Karen Hastie Williams, a retired attorney who has served on Gannett’s board for eight years. ‘‘ I think everyone is watching at this point and thinking, ‘ What if?’ ’’
Knight Ridder publishes 32 daily newspapers in 29 U. S. markets, with 8.5 million readers daily and 11 million Sunday.
Last month, Knight Ridder’s three largest shareholders, who control 37 percent of the company’s stock, demanded that the company put itself up for sale, citing the stock’s poor performance. Knight Ridder has since said it is working with investment bankers at Goldman Sachs and Morgan Stanley to explore its options, including a possible sale.
Gannett as bidder?
Among potential bidders, speculation has centered around Gannett, which is highly profitable and is cash- rich, and private equity firms that also have deep pockets.
But Williams said for now, Gannett is not considering a bid. She said Gannett at this point has ‘‘ a full plate,’’ and management and the board have not seriously discussed such an acquisition.
‘‘ It’s not under consideration at this juncture,’’ Williams said. ‘‘ At this point, we’re simply interested observers. That’s not to say in the future we might not get involved.’’
The Wall Street Journal on Thursday first reported that the three private equity firms were considering a bid for Knight Ridder. Spokesmen with all three firms declined to comment Thursday.
A Morgan Stanley analyst this week released a report analyzing Knight Ridder’s finances and argued that an acquisition by Gannett or a private equity firm would be attractive because they could still make a sizable profit by making deep cuts in staff and resources.
McClatchy thinking
Sacramento-based McClatchy is currently weighing whether or not to make a bid, according to a person with knowledge of the situation. Private Capital Management, Knight Ridder’s largest shareholder and the investor group leading the drive to have the company sold, owns a 38 percent stake in McClatchy. However, McClatchy has two tiers of stock that keep control of the company in family members’ hands.
McClatchy is significantly smaller than Knight Ridder. It currently has a market capitalization of $ 2.88 billion compared with Knight Ridder’s current value of $ 4.1 billion. McClatchy had revenue of $ 1.2 billion in 2004 compared with $ 3.0 billion posted by Knight Ridder last year.
A McClatchy spokeswoman declined to comment.
John Morton, an independent newspaper analyst, said any interest by McClatchy would probably be good news for Knight Ridder newspapers and employees.
‘‘ That would be the best of all possible worlds for everyone who works for Knight Ridder,’’ Morton said. ‘‘ They have a strong journalistic tradition and it’s still closely held by the family. They wouldn’t come in and wreck the place.’’ The Mercury News strives to avoid use of unnamed sources. When unnamed sources are used because information cannot otherwise be obtained, the newspaper generally requires more than one source to confirm the information. Contact Chris O’Brien at cobrien@ mercurynews. com or ( 415) 477- 2504.