New Media Investment Group Inc. (Gatehouse) and Gannett Co., Inc. announced New Media will acquire Gannett for a combination of cash and stock.
A release stated that the combined company will invest in newsrooms.
The merger will create a leading local and national media company with 263 daily media organizations across 47 states and Guam and USA, reaching more than 145 million unique visitors every month, a release stated.
The combined companies will control a large percentage of newspaper circulation in Delaware. Gannett owns the News Journal, New Castle and the Daily Times in Salisbury, MD. New Media-Gatehouse owns weekly papers in Hockessin, Middletown, Milford, Smyrna Dover and a Sussex County shopper.
Remaining papers in the state are the Newark Post, the twice-weekly Cape Gazette, the daily Delaware State News, monthly Milford Chronicle and Seaford-Laurel Star.
Both Gannett and Gatehouse have made deep cuts to news staffs in recent years
Gannett earlier fought off a takeover attempt by the parent of Digital First, a chain known for making deep cuts in staffing.
Both Digital First and Gatehouse are controlled by private equity funds that according to critics have little regard for the communities where their newspaper/websites are located.
Under the terms of the merger, shareholders of Gannett will receive $6.25 in cash and 0.5427 of a New Media share for each Gannett share they hold, representing total of $12.06 per Gannett common share based on New Media’s closing stock price as of August 2, 2019, and a premium of approximately 18 percent.
After the close of the transaction, Gannett shareholders will hold approximately 49.5 percent of the combined company and New Media shareholders will hold approximately 50.5 percent.
The merger brings together the portfolios of two large newspaper companies, and includes USA Today, Gannett’s flagship brand, and its more than 160 brands in the U.K., which will significantly expand the existing USA TODAY NETWORK.
“This combination will create a broad network of talented, experienced journalists poised to deliver unique and award-winning content for local communities and national audiences. The breadth and depth of each company’s digital offerings will make the combined company a leading digital media player. Additionally, the joining of New Media’s UpCurve and GateHouse Live businesses with Gannett’s ReachLocal and WordStream subsidiaries will provide multiple, diversified marketing and revenue solutions and position the combined company as a stronger partner for advertisers and small businesses (“SMBs”) in the markets served,” a release stated.
The merger is expect4d to provide synergies (cost cuts through combining operations) of $275 – $300 million annually across the combined company “in a judicious manner while continuing to invest in newsrooms,” the release stated.
“We believe this transaction will create value for our shareholders, greater opportunities for our employees, and a stronger future for journalism. Gannett is an innovative, digitally-focused media and marketing solutions company with well-known brands worldwide. Uniting our talented employees and complementary portfolios will enable us to expand our comprehensive, hyperlocal coverage for consumers, deepen our product offering for local businesses, and accelerate our shift from print-centric to dynamic multimedia operations. We are honored to become a part of Gannett’s storied history and a steward of their strong media properties into the future. We are committed to delivering significant synergies in a thoughtful manner, consistent with our shared goals for the business,” said Michael Reed, New Media CEO.
The release stated that New Media and Gannett believe that a digital transformation of the newspaper industry is vital to the preservation of journalism, and the merger will accelerate the combined company’s digital transformation.