An investor group’s deal to buy former Tronc Chairman Michael Ferro’s entire stake in the newspaper chain has fallen through.
In April, Ferro struck the deal to sell his 25.6% stake in Tronc — which owns the Los Angeles Times, the Chicago Tribune and other newspapers — for $208.6 million to McCormick Media. Ferro owned the shares personally and through his Merrick Media and Merrick Venture Management entities.
That purchase agreement priced Ferro’s more than 9 million shares of Tronc at $23 each. Ferro had the option to terminate the deal and receive a $1-million fee if it didn’t close by May 15 or five days after federal antitrust regulators signed off on the transaction.
In a filing with the Securities and Exchange Commission on Tuesday, Ferro said he terminated the purchase agreement because of a “breach of its obligations” by the buyer, McCormick Media.
A source familiar with the proposed transaction said Tuesday that McCormick Media was unable to fully finance the transaction.
The deal fell apart as Tronc’s $500-million sale of the Los Angeles Times and San Diego Union-Tribune to Los Angeles biotech billionaire Patrick Soon-Shiong, announced in February, has yet to close.
McCormick Media is headed by Sargent McCormick, a distant relative of the family that built the Tribune media empire nearly a century ago. Last month, McCormick legally changed his last name from Collier.
Other named investors in McCormick Media include John Lynch, former chief executive of the San Diego Union-Tribune, and Clancy Woods, a longtime radio executive who once ran the Sporting News Radio Network.
“Despite the challenges, we are continuing to work with partners on ways to complete the acquisition,” McCormick said in an emailed statement to the Tribune after the SEC filing.
Shares of Tronc have been trading less than $18 for nearly a month. They closed Tuesday at $17.01, up 1.6%.
Tronc spokeswoman Marisa Kollias said Tuesday that the agreement between Ferro and McCormick Media was a “private transaction not involving the company” and declined further comment.
A technology entrepreneur who previously owned the Chicago Sun-Times, Ferro became the largest shareholder and nonexecutive chairman of Tribune Publishing in February 2016.
Ferro stepped down from the board of Tronc in late March, just hours before Fortune published a story online that reported allegations of inappropriate sexual behavior toward two women while in his previous role as head of a Chicago investment firm.
Channick writes for the Chicago Tribune