The Washington Post Co. yesterday announced a tender offer by the company for 1.1 million, or 9 percent, of its own outstanding Class B common shares at $112 a share.
The announcement sent the price of Post Co. stock up 9 points, to close at 109. At the start of the year, Post Co. stock was trading at 80 1/4.
The Post Co. said it may purchase an additional 450,000 shares if they are offered, which would bring the total number of Class B shares purchased by the company to 1.55 million, or 13 percent of the total Class B stock currently outstanding.
"We think this represents a good use of corporate funds," a Post Co. spokesman said. "I think that we, like some other companies, perceived that our own shares represent a better investment opportunity than investing in some other businesses for which excessive premiums have to be paid."
While the company has no concrete plans to purchase its own stock in the future, such purchases continually are considered as an investment option, the spokesman said.
The Post Co. said that in connection with the tender offer, it has entered into an agreement with Berkshire Hathaway Inc., the largest single owner of Class B stock with 13.3 percent, under which Berkshire will sell The Post Co. one of the shares it owns for approximately every 7.5 shares purchased by the company from other stockholders.
Berkshire Hathaway, an Omaha-based insurance company headed by Post Co. director Warren Buffet, also agreed not to tender any of its shares pursuant to the tender offer. The goal of the separate agreement with Berkshire Hathaway is to maintain its stake in the outstanding Class B Post stock at 13.3 percent, and to enable Berkshire to be taxed on the transaction at a lower rate, a Post spokesman said.
The Post Co. said the tender offer is expected to begin during the week of March 25 and expire 15 business days later. The company said all shares tendered by stockholders who own less than 100 shares will be purchased without being subject to proration, provided they tender all their shares.
The total cost to the company of the tender offer and agreement with Berkshire could be as much as $196.7 million. The company said it will arrange necessary financing prior to commencing the offer.
The Post Co. also said its second-quarter dividend of 24 cents a share, payable on May 10 to stockholders of record on April 1, will be paid on all shares purchased under the tender offer.
Salomon Brothers will act as dealer manager in the tender offer.