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Gannett up 30 Percent on Acquisition of Belo

On Thursday, Gannett, one of the largest newspaper publishers in the U.S., announced that it was purchasing Belo for $1.5 billion in cash.

Under the deal, Gannett (NYSE: GCI) will pay $13.75 per share for Dallas-based Belo. This represents a 28 percent premium over Belo’s (NYSE: BLC) closing price on Wednesday, according to the Associated Press.

Belo is a television company that owns 20 stations and associated websites in the United States. According to the press release, the combination creates a broadcast “super group” making Gannett the nation’s fourth-largest owner of major network affiliates putting it in the homes of one-third of all U.S. households. The merger brings Gannett’s total number of broadcast affiliates to 43–up from 23.

The company believes that the transaction will create $175 million in annual run-rate synergies within three years after the deal closes.

Gracia Martore, President and CEO of Gannett, said,

“We are thrilled to bring together two highly respected media companies with rich histories of award-winning journalism, operational excellence and strong brand leadership.  We have been successfully transforming Gannett into a diversified multi-media company with broadcast, digital and publishing components across high-growth markets nationwide, and this is another important step in the process.  It will significantly improve our cash flow and financial strength, enabling us to quickly pay down debt while remaining committed to disciplined capital allocation.  By enhancing our portfolio with one of the largest, most geographically diverse and network-balanced TV station groups in the country, the new Gannett will be well positioned to lead innovation, bolster our existing growth initiatives and take advantage of new opportunities in the emerging digital media landscape.”

In early trading, Gannett is trading at $25.28–up 26 percent. Belo is up 27 percent at $13.66.

Disclosure: At the time of this writing, Tim Parker had no position in the equities mentioned.

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