Gannett Co., Inc
) announced the acquisition of television-station operator,
). The news prompted a more than 34% jump in the shares of the
newspaper conglomerate, with investors reacting positively to
this landmark event in its long history.
Gannett will purchase all outstanding shares of Belo for
$13.75 per share (a 28% premium to the company's closing price on
Wednesday), bringing the estimated value to $1.5 billion in cash.
Taking into account Belo's existing $715 million debt, the total
transaction value amounts to $2.2 billion. The company expects to
close the transaction by the end of 2013.
The deal will serve as a game changer for Gannett as it will
solidify its foothold in the rapidly growing broadcast media
business by almost doubling its existing broadcast portfolio from
23 to 43 stations. Alongside, this major acquisition makes it the
fourth-largest owner of major network affiliates in the U.S.
Moreover, this deal is a perfect fit for the company as it
will transform Gannett's business model, which was largely
focused on low margins newspapers to a high-margin multi-media
business and position it as the top affiliate for
Further, Gannett will emerge as the fourth largest affiliate
of ABC stations owned by
The Walt Disney Company
) and boost its leading position in the NBC affiliate group.
The company is fast adapting to the changing face of the
multiplatform media universe and with greater focus on broadcast
and digital assets, Gannett remains well poised to capitalize on
the promising digital media landscape.
The company stated that it expects to generate $175 million in
annual synergies within three years after the deal closure.
Further, it is anticipated to add about 50 cents to its adjusted
earnings per share within the first 12 months and expects to
generate substantial cash flow.
The company further added that the Broadcast division is
expected to generate more than half of the company's pro forma
EBITDA, while the Digital and Broadcast segments are collectively
expected to contribute almost two-thirds of it.
Alongside, Gannett announced a new $300 million share buyback
program, overriding its existing share repurchase authorization
and also stated that it will continue with its current dividend
Currently, shares of Gannett carry a Zacks Rank #3 (Hold).
BELO CORP (BLC): Free Stock Analysis Report
CBS CORP (CBS): Free Stock Analysis Report
DISNEY WALT (DIS): Free Stock Analysis Report
GANNETT INC (GCI): Free Stock Analysis Report
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