Bids Arriving, So What's Next for Knight Ridder?

By: E&P Staff As E&P reported Friday, two major newspaper companies, Gannett and McClatchy, a few private equity firms, and possibly Media News have expressed interest in buying San Jose-based Knight Ridder by its first deadline day Dec. 9. So what's next?

"Knight Ridder is now expected to move to a second round by inviting some or all of the bidders to examine its internal finances and visit with management and its newspapers," Chris O'Brien and Pete Carey reported today in KR's San Jose Mercury-news. "So far, potential bidders have been reluctant to say publicly that Knight Ridder is worth more than its current $4.12 billion market capitalization."

If that round doesn't produce bids well above the current stock price, it could open the door for CEO Tony Ridder to present an alternative plan to shareholders that could keep the company intact.

"I think you could argue, that if there is a way to keep most of properties together under the Knight Ridder banner, that would be his preference,"' Barry Lucas, an analyst at Gabelli & Co., whose affiliate, GAMCO, owns about 1% of Knight Ridder's stock, told the Mercury-News. "And if there's a lack of vigorous interest, it could play into that scenario."

But Wall Street remained skeptical that a sale would occur, the newspaper notes. Knight Ridder's stock fell 23 cents to $61.25 on Friday.