Brown Withdraws Offer to Buy CNHI Papers

By: Lucia Moses

Updated at 5:25 p.m. Eastern Standard Time

The Brown Publishing Co. on Tuesday withdrew a previously announced offer to buy a number of Community Newspaper Holdings Inc. (CNHI) properties, a rare occurrence in the newspaper mergers-and-acquisitions business.

Both sides confirmed that the terms of the financing by the seller killed the deal. CNHI didn’t feel the proposed contract adequately protected the company in case the buyer didn’t make future payments, CEO Mike Reed said.

Joel Dempsey, vice president and general counsel for Brown, said Brown offered an aggressive payment schedule that would have paid off CNHI faster than most seller-financed deals. “We felt very comfortable and confident all payments would be made to them … well, that’s really their issue, not ours,” Dempsey said.

Representatives of the companies said they still have a good relationship and would be open to doing deals with each other in the future.

The deal’s dissolution leaves CNHI to decide how to unload the group of papers it had hoped to sell to a single buyer.

Cincinnati-based Brown had announced Feb. 28 that it agreed to buy 11 CNHI dailies and 12 weeklies in the South and Midwest, a transaction that would have nearly doubled its daily circulation to 190,000 and expanded its geographic footprint.

Terms of the announced deal weren’t disclosed, but it would have represented the biggest newspaper sale of 2003 to date.

Meanwhile, Reed said CNHI continues to move toward executing a couple of other deals. The Birmingham, Ala.-based company has been selling its smaller papers to focus on dailies in the 15,000-to-50,000-circulation range.

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