At Least Two Bid for Knight Ridder on Friday

By: E&P Staff At least two potential buyers made preliminary bids Friday to acquire Knight Ridder Inc., the country's second-largest newspaper chain, three people familiar with the discussions told the Los Angeles Times.

Among those submitting offers by the first-round deadline, according to the newspaper, were investment firm Texas Pacific Group and an alliance of private equity investors Kohlberg Kravis Roberts & Co., Blackstone Group and Providence Equity Partners.

"The level of interest increases the chances that the publisher of the San Jose Mercury News, Contra Costa Times and 30 other dailies will change hands -- and at a higher price than the stock market has set," the Times declared.

"Investment bankers tracking the process said they expect at least two newspaper companies to join the bidding as well: the country's largest chain, Gannett Co., and privately held MediaNews Group Inc. McClatchy Co., which owns the Sacramento Bee, also has been exploring a bid, the bankers said.

"Industry consultant John Morton said he expects the eventual price to be more than Knight Ridder's current stock value of $4.1 billion, though not as high as activist investors have hoped."

Knight's Ridder's San Jose Mercury-News, meanwhile, had a similar but slightly different report:

"Two major newspaper companies -- Gannett and McClatchy -- and a handful of private equity firms have expressed interest in buying San Jose-based Knight Ridder, raising the chances that the nation's second-largest newspaper "group could be sold sometime next year.

"A source familiar with the bidding process also confirmed that MediaNews, a Denver-based newspaper company, was said to be interested in joining a bidding coalition but had not yet submitted its own bid.

On the private equity side, as expected, Knight Ridder received a joint bid from a trio of prominent firms -- Blackstone, Providence Equity and Kohlberg Kravis Roberts. Also expected to submit preliminary bids were Texas Pacific Group, Thomas H. Lee Partners, Madison Dearborn Partners and Spectrum Equity Partners. It was unclear Friday whether each of these firms was bidding separately or as part of some coalition."

Although Friday marked the first deadline, later offers will be considered.