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Dear Tronc, we're through. Love, Gannett.
There's a Viagra Triangle-like quality to the Tronc-Gannett romance—whose latest turn is that they've called the whole thing off.
As Robert Channick explains
in Wednesday's Trib
, it all began "in unsolicited and hostile fashion," when Gannett hit on Tronc (then still Tribune Publishing) last April, offering shareholders $12.25 a share—which was 63 percent more than those shares were listed at but nevertheless an affront to Tribune dignity. Gannett had big plans for their life together, but Tribune wasn't interested. CEO Justin Dearborn let shareholders know
his company was planning a "significant transformation" all by itself.
The hour grew later. Gannett upped its offer—first to $15, then to $18.75 a share—and assailed
's self-described visionary head, Michael Ferro, saying he was "acting in desperation" by playing hard to get. Major Tribune investors turned against Ferro
, a development I think of as the hormones talking to the head.
And Tribune weakened. Why don't you call me Tronc
? it said at one point.
But the other day, just when it looked like Tronc and Gannett would be walking out together, the deal fell apart. The Wall Street Journal explained
that during the canoodling, Gannett shares fell 54 percent in value and two of its major lenders pulled out.
Had Tronc played hard to get too long? Could be, said the WSJ
, observing that each side blamed the other. Tronc's terms were "not acceptable," said Gannett. Tronc said it now had "serious doubts" about Gannett's ability to back up its offer.
After the breakup, Gannett stock fell even further, and Tronc's plopped more than 12 percent, to $10.54 a share. As the WSJ
observed, "For shareholders in Tronc, a $15-a-share all-cash deal looks pretty good right about now."
Channick makes it clear that it's too soon to declare this one over. Expect Gannett to be back for another try. "We don't think for a minute it has anything to do with banks not being there," analyst Lance Vitanza told him. "We think it has everything to do with Gannett playing the walkaway card. . . . They correctly perceive that they will be able to come back and get it via a hostile basis at a much cheaper price."
Meanwhile, across the bar, the budding romance was being watched with mild horror by Ferro's old shop, now Sun-Times Holdings (those holdings being the Sun-Times
). With Tronc out of his hands, would Ferro somehow regain his position
atop Wrapports, the partnership that controls Sun-Times Holdings?
And what now? With Gannett out of his life—at least for now—could Ferro, if only to allay boredom, try to consolidate both major Chicago dailies under his command? After all, given the level of integration that already exists between the two papers—printing and distribution—a formal union that leaves the two newsrooms separate wouldn't be a huge step. The Sun-Times Holdings board would want to consider it.
But so would the Justice Department, on the grounds Chicago's big enough to support two papers with two owners. Taking on the DOJ would mean a long, public battle no one's interested in. So don't expect one.
A footnote: reading the latest Gannett press release
, I came across some marvelous boilerplate—a disclaimer advising us, basically, not to believe its news releases.
"This press release," said the press release, "contains certain forward-looking statements regarding business strategies, market potential, future financial performance and other matters.
"Forward-looking statements include all statements that are not historical facts. The words 'believe,' 'expect,' 'estimate,' 'could,' 'should,' 'intend,' 'may,' 'plan,' “seek,' 'anticipate,' 'project' and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance."
In other words, when we whisper in your ear about the wonderful life we're going to have together, we're blowing smoke.