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New Media Investment Group to Acquire USA Today Publisher Gannett.

M2 EQUITYBITES-August 7, 2019-New Media Investment Group to Acquire USA Today Publisher Gannett

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7 August 2019 - US-based print and digital media comapanies New Media Investment Group Inc. (NYSE: NEWM) and Gannett Co., Inc. (NYSE: GCI) have entered into a definitive agreement under which New Media will acquire Gannett for a combination of cash and stock, the companies said.

Under the terms of the deal, shareholders of Gannett will receive USD 6.25 in cash and 0.5427 of a New Media share for each Gannett share they hold, representing total consideration of USD 12.06 per Gannett common share based on New Media's closing stock price as of August 2, 2019, and a premium of approximately 18% to the five-day volume-weighted average price of Gannett shares as of that date.

After the close of the transaction, Gannett shareholders will hold approximately 49.5% of the combined company and New Media shareholders will hold approximately 50.5%.

The merger brings together the portfolios of two leading local newspaper companies, and includes USA Today, Gannett's flagship brand, and its more than 160 brands in the UK, which will significantly expand the existing USA Today Network.

This combination will create a broad network of talented, experienced journalists poised to deliver unique and award-winning content for local communities and national audiences.

The breadth and depth of each company's digital offerings will make the combined company a leading digital media player.

Additionally, the joining of New Media's UpCurve and GateHouse Live businesses with Gannett's ReachLocal and WordStream subsidiaries will provide multiple, diversified marketing and revenue solutions and position the combined company as a stronger partner for advertisers and small businesses in the markets served.

With strategically-aligned leadership and significant scale of operations, the merger will accelerate the combined company's digital transformation. The merger also affords an opportunity to realise run-rate cost synergies of USD 275 - USD 300 m annually across the combined company in a judicious manner, while continuing to invest in newsrooms.

The combined company's management team will be led by New Media's current chairman and chief executive officer, Michael Reed.

Alison Engel, Gannett's current chief financial officer, is expected to serve as the chief financial officer of the combined organization upon closing.

Gannett's newly appointed chief executive officer, Paul Bascobert, will become chief executive officer of the combined company's operating subsidiary.

The rest of the combined company's senior executive team, which is expected to be composed of highly experienced leaders from both companies, will be announced at a later date.

Bascobert was the president of XO Group from 2016 until its sale to Permira Equity in 2019. During his tenure, he helped lead the company's transformation from a media company to a marketplace business.

Prior to XO, Bascobert led sales, service, and marketing for the Local Businesses segment at Yodle from 2014 until 2016.

After the closing of the Merger, both New Media and its operating subsidiary GateHouse, will be rebranded and operate under the "Gannett" brand. The combined company will be headquartered in McLean, Va., with a continued corporate presence in existing locations.

New Media expects to fund the cash portion of the merger consideration through a combination of cash on the balance sheet and a new term loan facility to be funded at closing pursuant to a binding commitment from funds managed by affiliates of Apollo Global Management, LLC (NYSE: APO), a global alternative investment manager.

Initially, the combined company is expected to have an annual dividend of USD 0.76 per share. It is expected that the dividend will be increased over time as synergies are realized and leverage is reduced.

The merger is expected to close by the end of 2019, subject to the satisfaction of customary closing conditions, including receipt of regulatory clearances and approval by the shareholders of each company.

Advisors

New Media is one of the largest publishers of locally based print and online media in the United States as measured by its 154 daily publications.

As of June 30, 2019, New Media operates in over 600 markets across 39 states reaching over 21 m people on a weekly basis and serves over 200,000 business customers.

Gannett Co., Inc. (NYSE: GCI) is a digitally focused media and marketing solutions company committed to strengthening communities across its network. Credit Suisse is serving as financial advisor to New Media, and Cravath, Swaine and Moore LLP is serving as principal legal counsel.

New Media's Transaction Committee retained Jefferies LLC as its independent financial advisor, and Wilson Sonsini Goodrich and Rosati as its legal counsel.

Greenhill and Co., LLC and Goldman Sachs and Co. LLC are serving as financial advisors to Gannett, and Skadden, Arps, Slate, Meagher and Flom LLP and Nixon Peabody LLP are serving as legal counsel.

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Date:Aug 7, 2019
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