Gannett Co. Inc. (NYSE: GCI) is closing in on a cash-and-stock deal to be acquired by GateHouse Media LLC parent company New Media Investment Group Inc. (NYSE: NEWM), according to The Wall Street Journal.
The deal would combine Gannett with GateHouse, two of the country’s largest newspaper groups based on circulation. The two companies publish a combined 265 dailies and are seen as rivals in the struggling print newspaper market.
A deal could be announced in the next few weeks, provided discussions don’t fall apart, according to the report. The two companies began holding talks in May.
The media giants each have ties to Rochester: Gannett Company Inc., was formed in that city in1923 by Frank Gannett; GateHouse Media is headquartered in the Rochester suburb of Pittsford. The Rochester Democrat & Chronicle newspaper remains a Gannett property.
Potential terms of the deal were not disclosed in the report. Gannett’s share price, which closed at $7.90 on Thursday, rose 8 percent in after-hours trading after news of a potential deal surfaced.
GateHouse Chairman and CEO Mike Reed would take the same role with the combined entity, according to the report. Gannett has not had a permanent chief exec since Robert Dickey retired in May.
Gannett, now headquartered in McLean, Virginia, has been looking to partner up for several years. It made a failed attempt to buy Tribune Publishing Co. (then known as Tronc) in 2016. It has also recently held talks about a potential deal with McClatchy Co., as well as new talks with Tribune, according to the report. Earlier this year it rejected a buyout offer from Digital First Media and then fought through a proxy battle with Digital First's parent company over board seats.
The GateHouse deal is seen as the most optimal because it would offer more opportunities to cut costs — up to $200 million a year, according to the report. That would likely mean layoffs if a combination comes to fruition. GateHouse has a reputation for making deep cuts at the news outlets it acquires.
Gannett’s holdings include USA Today, the Arizona Republic and Milwaukee Journal Sentinel. Its share price has struggled ever since it split with its television business — now known as Tegna Inc. (NYSE: TGNA) — in 2015.
GateHouse mostly owns newspapers in smaller markets, but it has recently been buying up papers, including the Austin (Texas) American-Statesman. GateHouse owner New Media is operated by Fortress Investment Group LLC, which in turn is owned by Japan-based Softbank Group Corp.
Source:
https://www.bizjournals.com/buffalo/..._news_headline
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