Wachovia Analyst: Neither Offer for Tribune ‘Seems Appealing’

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By: E&P Staff

Wachovia Equity Research believes the reported bids for the Tribune Co. aren’t enticing. “Neither offer seems appealing to shareholders or management in our view, at least as they stand now,” Senior Analyst John Janedis wrote.

Two parties have reportedly expressed interest in the company. Published reports suggest Ronald Burkle and Eli Broad made a leveraged buyout offer that would give them roughly 30% of control for a $500 million cash infusion while raising an additional $11 billion in debt to fund the purchase price. They would also leave management in place. Burkle and Broad’s strategy is one that “management could also pursue … on its own without an ownership issue,” Janedis points out.

The Chandlers, Tribune’s largest shareholder, along with private equity firms, extended a bid as well that disclosed the parties would buy the newspapers and spin off the TV stations. The Chandler party offered $31.70 a share — or a 4% premium to the Jan. 17 close, according to Wachovia. Janedis notes that this offer seems to over-estimate the multiple for TV stations since the CW Network is still “unproven.”

More likely, he thinks the process will drag on: “Ultimately, we think either the bids will have to change over the next several weeks, or management will continue operating [Tribune] as is and look for other shareholder value creating events similar to what management proposed in May 2006.”

Wachovia maintained its “market weight” rating on the company.

Early this afternoon, shares of Tribune were trading up 51 cents to $30.85.

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