Tribune Co. Keeps Silent On Competing Buyout Bids

By Ashley M. Heher
Associated Press
Monday, April 2, 2007

CHICAGO, April 1 -- Tribune Co. remained silent Sunday as its board of directors reportedly met to vote on competing buyout offers.

The media company's 11-member board appeared to favor a $7.9 billion offer by real estate mogul Samuel Zell, the Chicago Tribune reported in its Sunday editions. The newspaper is owned by Tribune Co.

The company had set a Saturday deadline to announce a spinoff, buyout or reorganization.

The paper, citing an anonymous source, said the other bidders, Los Angeles billionaires Eli Broad and Ron Burkle, had all but conceded a Zell victory.

On Sunday, a person familiar with the matter who spoke on condition of anonymity said that neither party had admitted defeat. "I don't think anybody's given up."

Tribune spokesman Gary Weitman declined to comment Sunday. Zell spokeswoman Terry Holt, who has declined to comment throughout the buyout process, did not immediately return a message seeking comment, nor did a spokesman for Burkle.

Members of a special committee of board members spent much of the week sifting through the dueling offers for the company. Eli Broad and Burkle made an 11th-hour bid on Thursday, offering $34 per share, or about $8.1 billion. Tribune stock ended the week at $32.11.

The Burkle-Broad bid includes $500 million in cash and would use an employee stock-ownership plan to raise money for a buyout. It is believed that Zell proposed an investment of $300 million and also would use an employee stock-ownership plan.

An ESOP resembles a profit-sharing plan but allows the company to borrow money and repay loans using pretax dollars. Payments of both interest and principal are tax-deductible and would create more leverage for a buyer.

Tribune also is said to be considering a "self-help" plan that would involve spinning off the company's broadcast division and borrowing money to pay a one-time cash dividend to shareholders.

Like most newspaper companies, Tribune has been struggling with declines in profit, circulation and advertising revenue. Last month, the company announced that revenue fell 3.4 percent in February as its publishing division continued to struggle.

Tribune is the nation's second-largest newspaper publisher by circulation and also owns 23 television stations and the Chicago Cubs baseball team. In addition to the Chicago paper, its newspaper holdings include the Baltimore Sun and Los Angeles Times.

Tribune's share price fell about 50 percent from early 2004 until last spring and has languished at just above $30 for months, down from an all-time high of $60.88 in November 1999.

Zell has earned a reputation as an astute investor, making his fortune reviving moribund real estate. After a bidding war culminated in February, he sold his company, Equity Office Properties Trust, to the private-equity firm Blackstone Group for $39 billion.

He has said he has no plans to break up the company if his bid is accepted.

© 2007 The Washington Post Company