McClatchy Announces Agreements to Sell Five Knight Ridder PapersBack to News
SACRAMENTO, CA JUNE 7, 2006 – The McClatchy Company has entered into definitive agreements to sell five more Knight Ridder newspapers. As a result, McClatchy has now entered into definitive sales agreements for 11 of the 12 newspapers it is seeking to divest, the company announced. The sale of the 11 newspapers will bring total consideration of slightly more than $2 billion, including cash proceeds of $1.935 billion.
Dirks, Van Essen & Murray, a newspaper merger-and-acquisition firm based in Santa Fe, New Mexico, represented McClatchy in the transactions involving the five newspapers announced today.
“We are pleased with the full, fair prices we will receive, and pleased that we were able to execute on these sales as we promised,” McClatchy CEO Gary Pruitt said. “Some skeptics doubted us on both counts, but these deals reaffirm the underlying strength of the newspaper business, and the soundness of our plan for acquiring Knight Ridder. We expect to announce the sale of the Wilkes-Barre (PA) Times Leader in the next few weeks, which will complete the sale of all 12 newspapers we are seeking to divest.”
The five newspapers are being sold for a total of about $450 million. They include Akron (OH) Beacon Journal; Duluth (MN) News Tribune; Grand Forks (ND) Herald; Fort Wayne (IN) News- Sentinel; and Aberdeen (SD) American News. McClatchy announced on April 26 that it would sell three California newspapers and the St. Paul (MN) Pioneer Press for $1 billion and announced on May 23 that it would sell Knight Ridder’s two newspapers in Philadelphia for $562 million.
The closing of each of the divestiture transactions is conditioned upon the closing of McClatchy’s acquisition of Knight Ridder. McClatchy’s acquisition of Knight Ridder could close as soon as June 27, following a planned Knight Ridder shareholders vote on June 26. Most of the divestiture transactions are expected to close immediately or shortly following that closing.
“The prices we’re receiving for these 11 newspapers are certainly within the range we expected,” Pruitt said. Net after-tax proceeds of approximately $1.4 billion from the sales will immediately be applied to pay down debt incurred in the purchase of Knight Ridder’s 32 newspapers. “We bought the Knight Ridder papers for a multiple of about 9.5 times their 2005 cash flow; these 11 newspapers taken together will bring us 11.1 times the trailing 12-month cash flows through April,” Pruitt said.
McClatchy said when divestiture plans were announced in March that it expected sales of individual papers would generate widespread interest and substantial returns. “To buyers whose strategy is a good fit, all of these papers represented outstanding opportunities that come around only rarely in our industry,” Pruitt said. “The fact that the sales attracted seven very diverse and impressive purchasers for these papers speaks volumes about the value of newspapers and the confidence of investors who expect them to perform well. This is a good news story for the newspaper industry, and for everybody who understands the essential role that quality newspapers play.”
McClatchy, headquartered in Sacramento, California, is a leading newspaper and internet publisher. It publishes 12 daily and 16 non-daily newspapers located in western coastal states, North and South Carolina, and the Twin Cities of Minneapolis/St. Paul. McClatchy has daily circulation of 1.4 million and Sunday circulation of 1.8 million. McClatchy’s newspapers include, among others, the Minneapolis (MN) Star Tribune, The Sacramento Bee, The Fresno Bee and The Modesto Bee in California, the Raleigh (NC) News & Observer, the Tacoma (WA) News Tribune the Anchorage (AK) Daily News and Vida en el Valle, a bilingual Spanish weekly newspaper distributed throughout California’s Central Valley. McClatchy also operates leading local websites in each of its daily newspaper markets, offering readers information, comprehensive news, advertising, e-commerce and other services, and owns and operates McClatchy Interactive, an interactive operation that provides websites with content, publishing tools and software development. McClatchy is listed on the New York Stock Exchange under the symbol (MNI).