Past deadline, Tribune weighs bid but discloses no decision
Directors of Tribune Co. met late Sunday night to consider a sweetened offer by real estate mogul Sam Zell for the Chicago-based newspaper and television concern.
An announcement of a deal with Zell could come as early as this morning.
The directors still had concerns about several issues, including how employees would be protected if Zell was allowed to form an employee stock ownership plan to help him buy Tribune, according to a person familiar with Zell’s bid for the company.
A special committee of directors formed to oversee the auction met over the weekend, with the full board assembling by conference call at 10:30 p.m. Central time Sunday.
That included seven independent directors and three directors who represent the Chandler family, the largest shareholder of Tribune, which owns the Los Angeles Times, KTLA-TV Channel 5, the Chicago Tribune, the Chicago Cubs baseball team and other newspaper and TV properties.
Zell told Bloomberg News in a telephone interview Sunday that he had improved his offer, but he declined to say by how much.
“They are just working out details,” a Zell confidant, who asked not to be named, said Sunday. “You never know what’s going to happen, but I would say it’s going to be Zell, and it will be announced within the next 24 hours.”
Those watching the prolonged end of the 6-month-old auction said the board had not rejected an alternative offer from Los Angeles billionaires Ron Burkle and Eli Broad that was valued slightly higher than Zell’s proposal.
Tribune had originally hoped to complete its review of strategic alternatives by the end of 2006. But tepid interest in the company led to a three-month extension of that goal. The new deadline passed Saturday without a deal.
The company would have announced another extension if it were not on the verge of an agreement, observers of the negotiations said Sunday.
Zell’s offer had been valued at $33 a share, above the stock’s closing price Friday of $32.11. The stock had been languishing in recent weeks at under $30 a share, down more than 40% from a high three years ago, but popped when news of the Zell proposal leaked out.
Under Zell’s proposal to purchase Tribune with an ESOP, the new, privately held company would be able to take a tax deduction on any principal and interest payments that flowed through the plan. The tax break would effectively increase the company’s cash flow.
In an 11th-hour counteroffer late Thursday, Burkle and Broad suggested that an earlier bid they had submitted for $34 a share could be structured in the same manner.
Zell has said he is more bullish on newspapers than other investors, who have shied away from the company. He has told Tribune executives that he is particularly optimistic about online assets, including CareerBuilder, the biggest job search engine. Tribune co-owns the site with Gannett Inc. and McClatchy Co.
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