The lukewarm bidding for Chicago-based media company Tribune Co. has heated up, with Los Angeles billionaires Eli Broad and Ron Burkle submitting a last-minute bid for the owner of the Chicago Tribune and Los Angeles Times.
The late offer Thursday pits the two against Chicago billionaire real estate mogul Sam Zell, who was thought to be the favored bidder as Tribune’s board approached its self-imposed Saturday deadline to announce its plans.
Broad and Burkle value their bid at $34 per share, a person familiar with the offer told The Associated Press, making it a bit sweeter than Zell’s, which was valued at $33 per share or about $8 billion. The person who was not authorized to disclose details and asked to remain anonymous.
The Burkle and Broad bid includes $500 million in cash and would use an employee stock ownership plan to aid the recapitalization. It is believed that Zell was proposing to invest $300 million.
But with little else known about the offers, it was unclear whether Tribune’s board, which met Thursday, would consider the latest bid or even extend its deadline.
The nation’s second-largest newspaper publisher by circulation is also 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.
Zell spokeswoman Terry Holt, Broad spokeswoman Karen Denne and Tribune spokesman Gary Weitman all declined to comment on the latest bid. A call to a spokesman for Burkle was not immediately returned.
Tribune signaled its willingness to sell all or part of the company in September after being pressured by several large shareholders angered by its lagging stock price and sagging fortunes.
Chief among those shareholders were members of the Chandler family, which owned the Los Angeles Times for decades before selling its parent, Times Mirror, to Tribune in 2000 for $6.5 billion.
Last year, Broad and Burkle expressed an interest in buying the Los Angeles Times from Tribune, as had Los Angeles billionaire David Geffen.
But a day after Tribune replaced Times editor Dean Baquet for defying demands to make further staff cuts at the paper, Broad and Burkle made a surprise joint offer for the entire company, which includes nine other daily newspapers, as well as 23 TV stations and the Chicago Cubs baseball team.
The previous offer was also a recapitalization plan valued at about $34 per share and included the two men contributing $500 million in cash.
e offer also included significant debt that would allow a dividend payment to shareholders of $27 a share. Shareholders were to retain a majority stake in Tribune, while Broad and Burkle would have received about a 30 percent interest in Tribune and seats on the board.
Tribune initially balked at the offer, as well as an offer from the Chandlers, and was thought to be favoring the management-backed self-help plan. Then Zell made his offer earlier this month, after the company’s deadline for bids had passed.
Media analyst Tom Arnold said he is surprised that Burkle and Broad did not suggest the use of an ESOP earlier. Burkle incorporated employee ownership in a failed bid last year to buy the Knight Ridder Inc. newspaper chain.
“It’s interesting that the ESOP structure is what has changed here,” said Arnold, a founding partner of Colorado-based Summit Media Consultants. “Burkle has a long background as someone who is not afraid of working with unionized businesses. I’m surprised this is just coming around now.”
Like most newspaper companies, Tribune has been struggling with declining profits, circulation and advertising revenue. Last week, the company announced its revenues fell 3.4 percent in February as its publishing division continued to struggle.
Zell, 65, is known for his ability to revive moribund properties. He has had a golden touch with real estate ever since he got his start managing apartment buildings as a college undergrad.
The blockbuster sale of Equity Office Properties Trust last month, which netted Zell about $1 billion, only enhanced that legend.
Zell has said his proposal calls for taking the media conglomerate private and that he does not intend to break it up, but he otherwise declined to disclose details.
Broad, 73, co-founded Kaufman and Broad, a home builder known now as KB Home. He bought a life insurance company in 1971 for $52 million, transformed it into a retirement planning powerhouse renamed SunAmerica Inc. in 1989, then sold the company to American International Group Inc. in 1999 for $18 billion. His net worth is estimated at $5.8 billion.
He has since taken a high-profile role in boosting the arts in Los Angeles, contributing $18 million to help build the Walt Disney Concert Hall and donating $60 million to the Los Angeles County Museum of Art.
Burkle, through his Yucaipa Cos. investment firm, joined forces with union workers at nine Knight Ridder newspapers in an effort to buy that chain.
When Knight Ridder eventually sold to The McClatchy Co., which sold 12 papers it didn’t want to keep, Yucaipa again teamed with the Newspaper Guild-Communications Workers of America to submit a bid.
The 53-year-old Burkle started as a bag boy in the supermarket chain where his father was an executive. He later purchased the chain, then bought and sold larger companies, including Ralphs supermarkets. His wealth is estimated at $2.3 billion.