GateHouse Media has struck a deal with Gannett for a $1.4 billion merger that will create the largest newspaper group in the country.
Michael Reed will remain Chairman of the Board of Directors and CEO under the deal, while Alison Engel is expected to become Chief Financial Officer. Paul Bascobert, who is the newly appointment Chief Executive Officer of Gannett, will become the Chief Executive Officer of the combined company’s operating subsidiary.
As a result of the merger, the newly formed company, which will keep the Gannett name, will be home to 263 daily media organizations across 47 states and Guam, including USA Today. That number results in the new company owning one out of every six newspapers in the country.
The publisher’s expected reach numbers over 145 million unique visitors every month per Comscore measurements.
The new company is looking to building a sustainable digital future.
After the close of the deal, expected by the close of 2019, Gannett shareholders will hold approximately 49.5% of the combined company and New Media shareholders will hold approximately 50.5%.
The merger is expected to result in run-rate cost synergies across the new company of $275 million to $500 million annually. The majority of the synergies will likely be realized during the first two years, following the closing of the deal, and will happen as a result of increased scale of the new organization.
That means sharing best practices, leveraging existing infrastructure, facility rationalization and other cost reductions.
Michael Reed, New Media Chairman-CEO, stated: “We believe this transaction will create value for our shareholders, greater opportunities for our employees, and a stronger future for journalism… We are committed to delivering significant synergies in a thoughtful manner, consistent with our shared goals for the business.”
The merger follows an earlier attempt by MNG Enterprises, formerly known as Digital First Media, to take over Gannett. Gannett successfully fought off the months-long attempt.
Of the GateHouse merger, J. Jeffry Louis, Chairman of the Gannett Board of Directors, stated: “The Gannett Board unanimously determined that this combination with New Media is in the best interests of Gannett shareholders, customers, audiences, and employees, providing significant and immediate value, as well as the ability to benefit from the upside potential of the combined company.
"We see numerous opportunities to leverage the combined company’s enhanced scale and financial strength to continue to drive growth in the digital future. Importantly, we have found in New Media a strong partner and cultural fit for Gannett as we continue delivering on a shared commitment to journalistic excellence for the communities we serve.”
Credit Suisse is serving as financial advisor to New Media, and Cravath, Swaine and Moore LLP is serving as principal legal counsel. New Media’s Transaction Committee retained Jefferies LLC as its independent financial advisor, and Wilson Sonsini Goodrich & Rosati as its legal counsel.Greenhill and Co., LLC and Goldman Sachs and Co. LLC are serving as financial advisors to Gannett, and Skadden, Arps, Slate, Meagher and Flom LLP and Nixon Peabody LLP are serving as legal counsel.