The largest newspaper chain in the United States, Gannett Co Inc announced it would pay US$1.5 billion to purchase Belo Corp, the television company. The company would be added to the growing TV asset portfolio of the firm and offset against the newspaper business of the firm.
With the acquisition, the broadcast holdings of Gannet would double, allowing it to climb to fourth position in the US for major network affiliate ownership. The company would now be able to reach a third of all US households.
The offer made pegged the price at US$13.75 per share. At this price, the buyer provided a 28% premium over the share values of Belo at market close last Wednesday. The share values of both companies climbed the bourse with early trading, noting that Garnett had reached a five year high in terms of share valuations.
Should the transaction be approved, the broadcast segment available to Gannett would add more than half of the company's earnings prior to application of interest, tax, depreciation and amortization or EBITDA.
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