UPDATE: KR Stock Up 20% Since Buyout Speculation Began

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By: E&P Staff

Since Private Capital Management (PCM) pushed Knight Ridder on the block, the newspaper company’s stock has increased 20%, observes Bear Stearns analyst Alexia Quadrani. That’s compared with a 4% increase across the newspaper sector measured by Bear Stearns.

According to a note released Thursday, Bear Stearns doesn’t think that Knight Ridder will sell at a material premium from current levels. “If a deal is done near current levels, we believe the average valuation of the group (currently 9.9x) would decline as investor’s focus returns to industry fundamentals, which continue to deteriorate,” the note read.

The guessing game of buyers continues as the same names keep popping up, including newspaper companies Gannett, McClatchy, and MediaNews Group. The San Jose Mercury News confirmed in a story today that Dean Singleton, CEO of MediaNews Group, met with Knight Ridder executives this week about a potential bid. McClatchy management also met with Knight Ridder last week.

Additionally, Bear Stearns noted the Newspaper Guild plans to bid for some of Knight Ridder’s properties.*

Any deal is not expected to take place until mid-to-late March.

*An earlier version of this story incorrectly suggested that the Newspaper Guild had pulled its plan to bid for some Knight Ridder papers. The Bear Stearns report said the Guild “tabled interest,” meaning the Guild is still planning to bid.

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