Street Sends McClatchy Shares South

By: E&P Staff McClatchy?s Chief Gary Pruitt expressed disappointment that the Street had a negative reaction to the Knight Ridder acquisition -- shares fell $1.42 to $39.03 on the news of yesterday?s close.

?I?m certainly disappointed in the skepticism that the market has shown,? Pruitt told the Sacramento Bee?s Dale Kasler.

Since McClatchy announced it planned to buy Knight Ridder on March 13, the company?s shares declined 26.6% -- losing nearly half its value.

Pruitt is no stranger to investor doubt. McClatchy?s stock fell after the company purchased the Star Tribune in Minneapolis and The News & Observer in Raleigh, N.C. ?We have been here before,? he told the Bee.

However Kessler notes that since the Knight Ridder deal was a mix of stock and cash, nearly $500 million vanished from the total price. McClatchy paid $4 million and assumed $2 billion in debt.

Industry analyst John Morton told the Bee it?s typical that a company?s stock drops after completing a big transaction. Though Morton said: ?There?s still a lot of doubt overhanging the newspaper business, and McClatchy owns twice the doubt it had before.

Meanwhile the Bee said McClatchy plans to close the sale of the Philadelphia papers on Thursday; the transaction for the remaining papers will take place in late July. Yesterday, McClatchy announced it sealed the deal on papers in Duluth, Minn., Grand Forks, N.D., Aberdeen S.D., and Fort Wayne, Ind.