Tribune close to being sold.

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Leroy
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Tribune close to being sold.

Post by Leroy »

Tribune Close to Accepting Zell's $8 Billion Offer (Update2)

By Justin Baer and Leon Lazaroff

March 27 (Bloomberg) -- Tribune Co., owner of the Los Angeles Times and Chicago Cubs, will probably accept real estate billionaire Sam Zell's $8 billion takeover offer by the end of the week, according to people familiar with the matter.

An agreement is likely by Tribune's self-imposed deadline of March 31, said the people, who declined to be named because no decision has been made. Zell's offer of $33 a share is 6.8 percent above yesterday's close.

Zell's offer was competing with the company's plan to reorganize, as well as less-attractive bids from the company's largest shareholder, the Chandler family, and California billionaires Ron Burkle and Eli Broad. The auction dragged on for six months amid waning interest from buyers and an 8.4 percent drop in the stock.

``Shareholders have to be frustrated that this has gone on while the share price has declined,'' said James Peters, an equity analyst at Standard & Poor's in New York. He rates the stock ``hold'' and doesn't own it. ``The price being discussed reflects that fact that the company is in a declining revenue environment.''

Tribune said this month that newspaper advertising fell 5.1 percent in February to $233 million, led by a 13 percent drop in classifieds.

Zell spokeswoman Terry Holt didn't immediately return a call seeking comment. Tribune spokesman Gary Weitman declined to comment.

Shares of Chicago-based Tribune fell 2 cents to $31.10 at 4:22 p.m. in New York Stock Exchange composite trading.

No Break Up

Zell said this month that he plans to keep the company's television stations and newspapers intact, including the Chicago Tribune and stakes in the Food Network and CareerBuilder Inc., a Web site that lists job openings and resumes of job-seekers.

``My intention is not to break it up,'' Zell, 65, said in a March 12 interview.

Zell, a Chicago native, proposed creating an employee stock ownership plan to help finance billions of dollars of debt for the acquisition. The structure would shield the company from a large tax bill. Zell altered the mix of debt and equity and raised his offer to help allay the company's concerns that employees would take on too much risk.

Tribune is leaning toward Zell's plan as an alternative to its own so-called ``self-help'' proposal to spin off its 23 television stations and pay shareholders a one-time dividend funded by debt.

The dividend was designed to appease the Chandler family, which is seeking a return on its Tribune stake.

Going Private

Zell's proposal would give the family an exit and would take the entire company private.

Zell entered Tribune's auction in February as he prepared to sell his Equity Office Properties Trust, his hometown-based real estate investment trust, to Blackstone Group LP for $39 billion.

Under the offer by Broad and Burkle, Tribune would take on $11 billion in debt to fund a $27-a-share dividend. The billionaires planned to invest $500 million and valued their offer at $34 a share.

Broad's spokeswoman, Karen Denne, declined to comment. Frank Quintero, a spokesman for Burkle, didn't immediately return a call seeking comment.

Tribune has about $9 billion in total liabilities, including $4 billion in long-term debt, according to the company's filings.

Industry Declines

Tribune's decline in advertising revenue has been reflected across the industry. Ad sales at the four largest U.S. newspaper publishers, including New York Times Co., Gannett Co. and McClatchy Co., fell an average 5 percent last month from February 2006. Knight Ridder Inc. sold itself to Sacramento, California-based McClatchy last year after pressure from shareholders to boost its stock price.

The perceived risk of owning Tribune's bonds yesterday rose to the highest in almost five months as credit-default swap investors increased bets that the company will also be loaded up with debt in a Zell buyout.

Credit-default swaps based on $10 million of the company's bonds jumped $35,000 to $194,000, according to prices compiled by CMA Datavision in London. An increase in the contracts, used to speculate on the company's ability to repay its debt, indicates deterioration in the perception of credit quality.

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Phyrkrakr
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Post by Phyrkrakr »

So, where does this leave the Cubbies? Are they likely to be spun off to someone else, or is this guy a Cubs fan?

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valley_card22
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Post by valley_card22 »

salary dump!!!!!

98navigator
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Post by 98navigator »

valley_card22 wrote:salary dump!!!!!
LOL, yeah ok. That's not going to happen with longterm contracts. Sorry. :lol:

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