Tribune approves billionaire Zell’s $8.2 billion acquisition offer

Tribune Co. recently announced that it has accepted an $8.2 billion offer from real estate investor Sam Zell to acquire the newspaper publisher and broadcaster private. The company also announced its plans to sell the Chicago Cubs at the end of the 2007 season. The decision was taken after a board meeting that lasted until almost midnight. Bidder of the company, Samuel Zell, who is known for amassing one of the biggest property empires in the world, will invest around $315 million of his $5 billion fortune in the company that owns the Los Angeles Times and Chicago Tribune. However, despite the fact that Zell’s $8.2 billion offer was approved by Tribune, the options were left open for a higher bid from rivals including Ron Burkle and Eli Broad, two Los Angeles-based businessmen, who have jointly offered for the newspaper and television group. If these two businessmen put a higher bid and Tribune rejects Zell’s offer, the Chicago real estate magnate will receive a $25 million fee. Tribune owns 11 daily newspapers, including the Chicago Tribune and Los Angeles Times, along with 23 television stations, had been under pressure to enhance its stock price by its shareholders. The group was continuously losing readers and advertising revenue in recent times. Zell is contemplating to repay the debt basically through tax benefits from a new employee stock ownership plan that would supplement existing retirement accounts for the company’s 20,000 workers. Experts have argued that a gentle break up fee could allure a trumping offer from the Ron Burkle and Eli Broad partnership or another bidder, but this seems improbable following the extensive and very public nature of the review process. The company has said that the acquisition process will be conducted as a two-part deal. The first stage, likely to be completed in the second quarter and it will involve a cash tender offer of $34 per share for 126 million shares, representing around more than half of the outstanding Tribune shares. The remainder will be acquired later at the same rate of $34 per share price. In the meanwhile, challengers of media consolidation have speculated a fierce battle with regulators in Washington, particularly on the subject of Tribune’s cross-ownership of TV stations and newspapers in the same media market.