Gannett to acquire Belo Corp. in $1.5 Billion Cash Deal (GCI, BLC)

Gannett Company Inc. (NYSE: GCI) announced on Thursday that it has agreed to acquire a television Company Belo Corp. (NYSE: BLC) in an all cash deal estimated at $1.5 billion. Boards from both Companies have approved the deal, which is likely to close by the end of this year. However, it will be subject to an antitrust approval from the Federal Communications Commission (FCC) and stakeholders who own 2/3 of the voting power in Belo Corp. According to the terms of the deal, Gannett would pay $13.75 a share, which implies 28.1% premium over Belo Corp’s closing stock price on Wednesday. Gannett said that it would finance the deal through a combination of cash in hand, raising funds from capital markets and bank financing. After the deal was announced, shares of both Companies soared. While Gannett’s stock was up about 22%, shares of Belo Corp were gaining about 27%, during early trade. Gannett, which is the publisher of USA Today, expects that the acquisition of Belo Corp would boost non-GAAP earnings by about 50 cents a share within first 12 months while operational synergy will help saving $175 million, annually, in first three years. Gannett pointed out that the proposed acquisition will speed up its ongoing transformation towards a diversified, strong margin, multi-media company. The merger would allow Gannett to almost double its broadcast portfolio to 43 stations up from 23 stations, which it operates now. Commenting over the deal, Gannett Company President and Chief executive, Gracia Martore said, “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.” For Gannett, J.P. Morgan Securities provided financial advice while Nixon Peabody and Paul Hastings offered legal advice. For Belo, RBC Capital Markets provided financial advice while Wachtell Lipton Rosen & Katz offered legal advice.