Posted on 01/17/2007 4:33:52 AM PST by Liz
Tribune Co., owner of the Chicago Cubs, the LA Times and Newsday, appears to have thrown a takeover party where no one showed up......private-equity firms that have been meeting with Tribune's management and looking over its financial records for the past several months do not plan to submit final offers, sources close to the process said........The only attendee at the party seems to be the Chandler family, which originally pressured Tribune's board to conduct a public sale process last year. It's still unknown whether billionaire philanthropist Eli Broad and financier Ron Burkle plan to bid. Sources said that the two are only interested in owning the LA Times and are trying to figure out how to divest the Tribune's other assets if they buy.
Tribune owns several television stations, the Chicago Tribune and local and regional newspapers. Newspaper giant McClatchy's recent sale of the Minneapolis Star Tribune for 55% less than they bought it in 1998 further put off buyers.
(Excerpt) Read more at nypost.com ...
"Private equity" is the new bubble in the US economy. CNBC is starting to get wide-eyed about the possibility of a $100B "takeunder" some time this year, based on the increasing number and value of private equity deals.
So it's pretty damning that nobody wants to bite at the Trib.
I'm going to caLL ANd offer 10 bucks for the Cubs.
Seriously the Cubs are their single biggest money maker by sale of the individual properties.
Bought them for 21 million today they'd go for about 600 million.
ping
There's a deal.
This emerging trend of Dinosaur Fishwraps losing potential suitors/buyers will hammer the stock price of TRB and others which has pushed the idea of a buyout as a reason to own TRB.
Silent auction...
No one even showed up to bid
Suitors backing off as deadline arrives
By Michael Oneal and Becky Yerak
Tribune staff reporters
Published January 17, 2007, 6:18 AM CST
After a painstaking, closely watched process that has stretched for almost four months, the auction for Tribune Co. appears to be fizzling.
Offers are due Wednesday at 5 p.m. Central time, but as of Tuesday night few, if any, of the original suitors seemed intent on making a firm bid.
A source familiar with the situation said the private-equity group that appeared to be the lead horse--Chicago's Madison Dearborn Partners, New York's Apollo Management and Rhode Island's Providence Equity Partners--might not follow through on a bid.
If a bid fails to materialize Wednesday, that might delay any offer from California's Chandler family, which observers said was working on a bid largely to make sure its 20 percent stake in Tribune wasn't eroded by a lackluster auction.
Los Angeles billionaires Eli Broad and Ron Burkle, meanwhile, had "everything lined up" for a bid as of Sunday, said a source close to the group. But it wasn't clear Tuesday night whether they truly intended to push the button on an offer.
Given the ambivalence that has surrounded the auction since its early rounds, a lack of bids would not necessarily come as a surprise to Wall Street. But sources said it could incite a new struggle for control of the company, which includes the Chicago Tribune, Los Angeles Times, Chicago Cubs and other media properties.
"One way or another, you gotta make some things happen," said one Tribune executive.
One source with knowledge of the process said Tribune management, led by Chairman and Chief Executive Dennis FitzSimons, likely will present the board with a series of options that could serve as a fallback plan to boost the company's stock price in the case that acceptable bids fail to materialize.
These options could include buying back additional shares or paying a big dividend, both of which would require taking on more debt. Or management could propose a tax-free spinoff of properties like Tribune's broadcast assets, a transaction that would create a separate public company distributed to current Tribune shareholders.
Whether such moves would placate shareholders is a matter of debate. Analysts at Lehman Bros. and Merrill Lynch issued reports in recent days saying that Tribune's stock is unlikely to go higher. The Lehman report was especially bleak, saying newspapers are generally overvalued and likely will plunge if Tribune fails to attract any bids.
Any stock weakness after a failed auction would give the Chandlers cause to argue that much more aggressive steps are needed. The family has argued for selling off the Los Angeles Times or other newspapers to take advantage of "vanity" buyers in local markets who might pay a premium to protect a local asset.
In addition to Burkle, Broad and record executive David Geffen in Los Angeles, local interest has surfaced in Hartford and Baltimore, where Tribune also owns papers. Media rivals like Gannett Co. and MediaNews Inc., meanwhile, might be interested in other papers.
"[The Chandlers] are not going to own and hold their stock for any extended period," predicted one Tribune manager close to the process. "I would think they're looking hard at a way to make this make sense for them."
But that could put the family in opposition to FitzSimons, who favors keeping the newspapers together. Tribune's tax basis in its papers is so low that the company might never be able to get a high enough price to make up for the tax bill incurred upon selling them. FitzSimons and his team also believe that a national chain of newspapers is crucial for building out the company's Internet strategy, which focuses on online classified networks like CareerBuilder.
At this point, several things are working in FitzSimons' favor. First, if no buyers show up for the company, shareholders might resign themselves to the notion that Tribune is worth only around $30 a share in this kind of market. One investor argued on Tuesday that shareholders have to consider that Tribune's stock price has well outpaced the industry's dismal performance since the Chandlers first began to raise a ruckus last spring. The anticipated acquisition premium already may be built in. Any further returns generated by special dividends or a broadcast spinoff would provide incremental, not spectacular, gains.
The second thing is that the Chandlers' power has been blunted somewhat by an agreement they made with the company to unwind two controversial partnerships Tribune inherited when it bought Times Mirror Co., former owner of the Los Angeles Times, in 2000. The Chandlers took control of roughly 11.8 million additional shares when those partnerships were unwound, giving them their 20 percent stake in Tribune Co. But they also agreed to vote those shares along with the majority for 12 months. As a result, the Chandlers' true control extends to around 15 percent of the shares outstanding.
If the stock price keeps falling, however, pressure from other shareholders probably would build again over time. And the Chandlers have proven adept at structuring transactions that get around tax problems.
Said an investment banker close to the process, "If nothing happens [in the auction], the problem doesn't just go away."
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