More Tribune Intrigue: Board Presses Zell for Higher Bid on Sunday

By: E&P Staff and The Associated Press

The Tribune Co. remained silent on Sunday as intrigue swirled around two serious bids to acquire the company.

“In a last-minute negotiations, executives for the Tribune Company have been pushing Sam Zell, the Chicago real estate tycoon, to increase his bid for the company by late tonight, according to people close to the talks,” The New York Times reported late Sunday. “If he does so, the company may announce that won the bidding war.

“Or Mr. Zell could walk away, and it is not clear at that point whether the Tribune board members would accept a rival bid from two Los Angeles billionaires, Ronald W. Burkle and Eli Broad, or whether they would decide to restructure the company themselves.

“Mr. Zell?s announced bid of $33 a share, which he already increased once, was $1 less than the Burkle-Broad bid. On Friday afternoon, Tribune executives told Mr. Zell that he would have to offer them more money if he wanted to buy the company, the people close to the talks said. Mr. Zell came back with a new bid that was believed to be close to $34 a share, these people said, but not quite.

“The Tribune board met this morning and rejected Mr. Zell?s latest offer, and told him he would have to increase it yet again. He was given 12 hours to make a new offer. The people close to the talks said the board plans to meet late tonight and could accept Mr. Zell?s offer then if it is high enough.

“It is not clear if Mr. Broad and Burkle also increased their bid, but it was unlikely that the board had rejected it because then they would have no leverage to push Mr. Zell to bid higher. Nor is it clear how much Mr. Zell planned to offer or if he would even come back with a new offer at all.”

An Associated Press report, also from Sunday, follows.

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Tribune Co. remained silent Sunday as its board of directors reportedly met to vote on competing buyout offers for the media company.

Tribune’s 11-member board appeared to favor a $7.9 billion buyout offer by real estate mogul Sam Zell, the Chicago Tribune, which is owned by the media conglomerate, reported in its Sunday editions.

Chicago-based Tribune had set a March 31 self-imposed deadline to announce a spin-off, buyout or reorganization.

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

A person familiar with the matter told The Associated Press on Sunday that no party had admitted defeat.

“I don’t think anybody’s given up,” said the person, who asked not to be identified.

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 Burkle spokesman.

Members of a special committee of board members spent much of the week sifting through dueling offers for the nation’s second-largest newspaper publisher by circulation.

Broad and Burkle made an 11th-hour bid for the company on Thursday, offering $34 per share, or $8.2 billion, said the person, who has knowledge of the offer but was not permitted to disclose details.

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 would use a 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 declining profits, circulation and advertising revenues. Last month, the company announced revenue fell 3.4 percent in February as its publishing division continued to struggle.

In addition to the Chicago Tribune, the company owns nine other daily newspapers, including The Los Angeles Times, as well as 23 TV stations and the Chicago Cubs baseball team.

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.

Its shares climbed nearly two percent Friday on the New York Stock Exchange as investors awaited an announcement from the company.

Zell, 65, 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, to the private equity firm Blackstone Group for $23 billion.

He’s proposed using an employee stock ownership plan as a way to lower the taxes of any sale, but has said he had no plans to break up the company.

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