Gannett May Have Dropped Bid for All of Knight Ridder

By: E&P Staff Gannett Co. appears to have dropped out as an independent bidder for all of Knight Ridder Inc. and may instead try to join a group seeking to buy the San Jose-based newspaper company, Reuters has reported, citing sources close to the sale process. They say that Gannett skipped a meeting with Knight Ridder this week to go over the company's financial data, a sign it will not bid independently.

Instead, Reuters reported, Gannett may try to forge an agreement with Denver-based publisher MediaNews Group Inc. and its partners. MediaNews has been working on a bid with buyout firms Vestar Capital Partners, Madison Dearborn Partners and Onex Corp.

"MediaNews and Gannett have a close relationship -- the two companies are partners in a range of joint publishing ventures," Reuters explained. "MediaNews' tie-up with the private equity firms shouldn't preclude it from folding Gannett into the mix either before or after a deal is done, sources said, and Gannett's inclusion could help make the group more formidable....

"Gannett is the only prospective suitor that has not met with Knight Ridder's management, sources say. It's possible Gannett could join one of the other bidding factions, though it has few, if any, ties with those groups that compare to its bond with MediaNews.

"The auction for Knight Ridder could become less competitive and attract less lucrative offers without Gannett as a separate bidder, some sources said. But Gannett's commitment to making an offer on its own has wobbled for months. The company signed Knight Ridder's confidentiality agreement weeks after other bidders because it wanted to be able to talk with, and potentially ally with, other factions, sources have said.

"Much of the alliance-jockeying between suitors on any deal comes before they sign confidentiality agreements, because such pacts can strictly limit each bidder's ability to communicate with other parties and forge new partnerships.

"A second round of bids for Knight Ridder is expected to be due late this month, though sources told Reuters last month that Knight Ridder was issuing overly-rosy financial projections during meetings with bidders that caught them by surprise and could delay the process."

Knight Ridder said on Friday that it has postponed its annual shareholder meeting scheduled for April 18, and did not say when the meeting would be rescheduled.