The parent company of the Star Tribune has agreed to buy Knight Ridder Inc., publisher of the St. Paul Pioneer Press, for $4.5 billion, in a deal that will create the nation's second-largest newspaper chain.
McClatchy Co., which publishes the Star Tribune and 11 other daily newspapers, said early today that it will pay $67.25 in cash and stock for each share of San Jose, Calif.-based Knight Ridder. The company will also assume about $2 billion in Knight Ridder debt, making the total value of the deal $6.5 billion.
McClatchy will not keep all the newspapers it is acquiring. The company plans to sell 12 of the 32 Knight Ridder daily newspapers, including the Pioneer Press, Duluth News Tribune, Grand Forks Herald, Philadelphia Inquirer, San Jose Mercury News and Akron Beacon Journal. It will keep the Miami Herald, Kansas City Star, Fort Worth Star-Telegram and Charlotte Observer, among others.
The company said in a statement this morning that it will sell the Pioneer Press due to anticipated anti-trust concerns if it owned both Twin Cities newspapers.
No buyers for the Pioneer Press or the other newspapers to be divested were announced. McClatchy chief executive officer Gary Pruitt told CNBC this morning that the company "will begin marketing those newspapers today."
In a letter sent to McClatchy employees this morning, Pruitt said the company has no plans to eliminate jobs at the newspapers it is buying.
"We don't plan any across-the-board layoffs at the Knight Ridder papers we retain, though there are some job duplications on the Knight Ridder corporate staff and at Knight Ridder Digital [Knight Ridder's Internet operations] that will have to be addressed," Pruitt wrote.
The deal is expected to close in three to four months. The combined company will have a daily circulation of about 3.2 million, second only to USA Today publisher Gannett Co. In addition to 32 daily newspapers, Knight Ridder has 50 non-dailies.
"Opportunities like this come perhaps once in a company's lifetime, and we're thrilled to have this chance to extend McClatchy journalism and our proven newspaper operations to 20 high-quality newspapers in high-growth markets," Pruitt said in a statement released when the deal was announced.
Knight Ridder has about 18,500 employees. Its largest union, the Newspaper Guild-Communications Workers of America, has proposed buying nine newspapers, including the Pioneer Press, Inquirer and Mercury News. The union and private equity firm Yucaipa Cos. of Los Angeles plan to make an offer.
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