Belo Corp (NYSE:BLC): adding scale to Gannett

Posted by Lynn Eisler June 14, 2013 0 Comment 903 views

Dallas-based Belo Corp (NYSE:BLC) will be acquired by Gannett Co. Inc. The deal is valued at $2.2 billion and includes WFAA-TV. Dunia Shive, Belo’s chief executive said this sale is a very outstanding and compelling transaction for BLC’s shareholders. Garcia Martore, Gannett’s chief executive said this deal will make Gannett a super group.  Its total number of its television stations will nearly double thus making the company the largest player in the country’s top-25 markets. It gives the company the scale that is required to stay ahead in an emerging marketplace.

By circulation, Gannett is the largest newspaper publisher in the U.S. The deal gives the company entry into some of the high-potential markets in the U.S, such as Houston, Dallas, Seattle and San Antonio. This sale is not inclusive of A. H. Belo Corporation, which is the owner of The Dallas Morning News and had been spun off in 2007.

The numbers

Gannett will be acquiring all of BLC’s outstanding shares at $13.75/share in cash, or around $1.5B, in addition to the $715M in existing debt. The deal has received unanimous approval from the boards of directors of both Belo Corp (NYSE:BLC) and Gannett. However, 2/3rd of the voting power of BLC shareholders will also have to vote on it. Bernstein Liebhard, the New York law firm, said that it is looking into whether Belo Corp (NYSE:BLC)’s board of directors have breached its fiduciary duty to its stakeholders by agreeing to the sell-out.

Belo shares were up 28.33%, to close at $13.77 in early trading. Gannett, which is the owner of USA Today as well as other newspapers and television stations, saw its shares rising by 34.01%, to close at $26.60 in Thursday’s trading.

The shareholder quotient

Conventionally the Board of Directors is the primary player in any United States M&A transaction. The Board is actually the principal gatekeeper, and it determines when and how transactions will be pursued. This includes whether it wants to permit its stakeholders to have any effective opportunity to accept even a hostile offer. However, of late, shareholders have been becoming more assertive and a paradigm shift seems to be taking place. Hopefully, Belo Corp (NYSE:BLC)’s shareholders will see profitability in the Gannett deal.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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