The two largest newspaper companies in the country intend to merge. GateHouse Media (owned by New Media Investment Group) announced the purchase of Gannett for $1.38 billion on Monday. Pending approval, the deal is expected to close by the end of 2019, with the two brands operating under the Gannett name.
If approved, the merger would give one company control of local newsrooms throughout the country, including USA Today and 263 daily media organizations across 47 states and Guam.
“We believe this transaction will create value for our shareholders, greater opportunities for our employees and a stronger future for journalism,” Michael Reed, New Media chairman and CEO, said in a statement.
Under the terms of the deal, New Media would acquire Gannett, which includes more than 100 local brands, for a combination of cash and stock. Shareholders would receive $6.25 in cash and 0.5427 New Media shares for each Gannett share they hold. Gannett shareholders would hold about 49.5% of the company, while New Media shareholders would have about 50.5%.
“We see numerous opportunities to leverage the combined company’s enhanced scale and financial strength to continue to drive growth in the digital future,” said J. Jeffry Louis, chairman of Gannett’s board of directors, in a statement.
Media buyers were fearful earlier this year when Digital First Media, a hedge fund-backed group owned by Alden Global Capital, first put in a bid for Gannett. Buyers who knew Gannett for its branded newsrooms, which they said offered a solid way to reach local audiences, were worried about the new owners potentially laying off staff.
The new Gannett would be based in McLean, Va., with a “continued corporate presence in existing locations,” the companies said in a statement. Reed would stay on as the company’s CEO and lead its management team. Alison Engel, Gannett’s current CFO, would continue in that role. Paul Bascobert, Gannett’s newly appointed CEO, would remain in that role leading its operating subsidiary.