The television portfolio of Gannett will be vastly enriched when it pulls the television properties of Belo into the fold. The two companies announced a merger that will involve stock purchases and debt assumption amounting to about $2.2B.
The price works out to $13.75 per share, and represents a 28.1% premium based on Belo’s 6/12/13 closing price.
Gannett will go from 23 to 43 stations. Although its footprint is national already, its eastern orientation will be enhanced by Belo’s greater concentration in markets west of the Mississippi.
Gannett expects $175M worth of savings on synergies within three years of closing, which is expected before the year is out. The multiple, without considering the eventual savings, is 9.4x; taking synergies into account it drops to 5.4x.
Gannett President/CEO Gracia Martore stated, “We are thrilled to bring together two highly respected media companies with rich histories of award-winning journalism, operational excellence and strong brand leadership. We have been successfully transforming Gannett into a diversified multi-media company with broadcast, digital and publishing components across high-growth markets nationwide, and this is another important step in the process. It will significantly improve our cash flow and financial strength, enabling us to quickly pay down debt while remaining committed to disciplined capital allocation. By enhancing our portfolio with one of the largest, most geographically diverse and network-balanced TV station groups in the country, the new Gannett will be well positioned to lead innovation, bolster our existing growth initiatives and take advantage of new opportunities in the emerging digital media landscape.”
Added Belo President/CEO Dunia A. Shive, “This is an outstanding and financially compelling transaction for our shareholders. It is also a testament to the tremendous value our employees have created over Belo’s long history and to the strength of our brand in the media industry. I am confident that we have found an excellent partner in Gannett – they are a leading media company that shares our commitment to the highest levels of journalistic integrity and embraces an active approach to community involvement. Together, this portfolio of media assets will be well-positioned to capitalize on substantial growth opportunities in the years ahead.”
RBR-TVBR observation: Interesting that two corporations known for their newspapers breathe not a word about print when striking this major deal.