Two Leading Media and Marketing Solutions
Companies Align to Preserve and Enhance Quality Journalism
Creates the leading U.S. print and digital
news organization with deep local roots and nationwide
scale
Michael Reed to remain Chairman of the Board
of Directors and Chief Executive Officer; Alison Engel expected to
become Chief Financial Officer; Paul Bascobert, newly appointed
Chief Executive Officer of Gannett, will become Chief Executive
Officer of the combined company’s operating subsidiary
Strategically-aligned leadership committed
to expanding and promoting digital offerings and high-quality
journalism
Anticipated run-rate cost synergies of $275
- $300 million annually, unlocking meaningful shareholder
value
New Media’s external management agreement to
be amended at closing and terminated in 2021
New Media Investment Group Inc. (“New Media”) (NYSE: NEWM) and
Gannett Co., Inc. (“Gannett”) (NYSE: GCI) announced today that New
Media and Gannett have entered into a definitive agreement (the
“Merger Agreement”) pursuant to which New Media will acquire
Gannett for a combination of cash and stock (the “Merger”).
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Under the terms of the Merger Agreement, shareholders of Gannett
will receive $6.25 in cash and 0.5427 of a New Media share for each
Gannett share they hold, representing total consideration of $12.06
per Gannett common share based on New Media’s closing stock price
as of August 2, 2019, and a premium of approximately 18% to the
five-day volume-weighted average price of Gannett shares as of that
date. After the close of the transaction, Gannett shareholders will
hold approximately 49.5% of the combined company and New Media
shareholders will hold approximately 50.5%.
The Merger brings together the portfolios of two leading local
newspaper companies, and includes USA TODAY, Gannett’s flagship
brand, and its more than 160 brands in the U.K., which will
significantly expand the existing USA TODAY NETWORK. This
combination will create a broad network of talented, experienced
journalists poised to deliver unique and award-winning content for
local communities and national audiences. The breadth and depth of
each company’s digital offerings will make the combined company a
leading digital media player. Additionally, the joining of New
Media’s UpCurve and GateHouse Live businesses with Gannett’s
ReachLocal and WordStream subsidiaries will provide multiple,
diversified marketing and revenue solutions and position the
combined company as a stronger partner for advertisers and small
businesses (“SMBs”) in the markets served.
With strategically-aligned leadership and significant scale of
operations, the Merger will accelerate the combined company’s
digital transformation. The Merger also affords an opportunity to
realize run-rate cost synergies of $275 - $300 million annually
across the combined company in a judicious manner, while continuing
to invest in newsrooms.
“We believe this transaction will create value for our
shareholders, greater opportunities for our employees, and a
stronger future for journalism. Gannett is an innovative,
digitally-focused media and marketing solutions company with
well-known brands worldwide. Uniting our talented employees and
complementary portfolios will enable us to expand our
comprehensive, hyperlocal coverage for consumers, deepen our
product offering for local businesses, and accelerate our shift
from print-centric to dynamic multimedia operations. We are honored
to become a part of Gannett’s storied history and a steward of
their strong media properties into the future. We are committed to
delivering significant synergies in a thoughtful manner, consistent
with our shared goals for the business,” said Michael Reed, New
Media Chairman and Chief Executive Officer.
“The Gannett Board unanimously determined that this combination
with New Media is in the best interests of Gannett shareholders,
customers, audiences, and employees, providing significant and
immediate value, as well as the ability to benefit from the upside
potential of the combined company,” said J. Jeffry Louis, Chairman
of the Gannett Board of Directors. “We see numerous opportunities
to leverage the combined company’s enhanced scale and financial
strength to continue to drive growth in the digital future.
Importantly, we have found in New Media a strong partner and
cultural fit for Gannett as we continue delivering on a shared
commitment to journalistic excellence for the communities we
serve.”
The companies will co-host a call to discuss the transaction and
second quarter earnings on August 5, 2019 at 4:15 p.m. Eastern
Time. Please visit the Investor Relations section of either
company’s website (www.newmediainv.com or www.gannett.com).
Compelling Strategic & Financial
Benefits
Enhanced scale. New Media and Gannett share a strategic
vision, and the combined company’s significantly enhanced scale of
operations will enable it to realize this vision more rapidly,
while generating value for shareholders and benefits for employees
and other stakeholders. The Merger will create a leading local and
national media company with 263 daily media organizations across 47
states and Guam and USA TODAY, reaching more than 145 million
unique visitors every month, as measured by Comscore. This scale
will meaningfully enhance the combined company’s financial profile
by leveraging nationwide reach and local presence to expand and
deepen relationships with consumers and businesses. As a result, we
will accelerate the growth of the combined company’s digital
revenue through innovative customer experiences and new marketing
solutions for businesses, while creating an expansive journalism
network with the resources required to deliver unique and
award-winning content.
Accelerate digital strategy. New Media and Gannett
believe that a digital transformation of the newspaper industry is
vital to the preservation of journalism, and the Merger will
accelerate the combined company’s digital transformation. The
breadth and depth of each company’s digital offerings will make the
combined company a leading digital media player and a stronger
partner for advertisers and SMBs.
Significant synergies. New Media and Gannett share a
commitment to rationalizing costs as the media industry evolves,
while continuing to invest in product development, training for
newsrooms and understanding readers’ needs. The Merger is
anticipated to result in run-rate cost synergies across the
combined company of $275 - $300 million annually, unlocking
meaningful shareholder value. The majority of synergies is expected
to be realized within 24 months of closing and result from the
increased scale of the new organization, sharing of best practices,
leveraging existing infrastructure, facility rationalization and
other judicious cost reductions.
External Management Agreement. New Media and FIG LLC, an
affiliate of Fortress Investment Group (the “Manager”), have
amended the external management agreement to set the termination
date as December 31, 2021. The amendment, as described in more
detail below, also reduces the incentive fee rate payable to the
Manager for the remainder of the term.
Leadership and
Governance
The combined company’s management team will be led by New
Media’s current Chairman and Chief Executive Officer, Michael Reed.
Alison Engel, Gannett’s current Chief Financial Officer, is
expected to serve as the Chief Financial Officer of the combined
organization upon closing. Gannett’s newly appointed Chief
Executive Officer, Paul Bascobert, will become Chief Executive
Officer of the combined company’s operating subsidiary. The rest of
the combined company’s senior executive team, which is expected to
be composed of highly experienced leaders from both companies, will
be announced at a later date.
Mr. Bascobert was the President of XO Group from 2016 until its
sale to Permira Equity in 2019. During his tenure, he helped lead
the company’s transformation from a media company to a marketplace
business. Prior to XO, Mr. Bascobert led sales, service, and
marketing for the Local Businesses segment at Yodle from 2014 until
2016. Before that, he spent four years at Bloomberg LP as President
of Bloomberg Businessweek from 2010 until 2014, in addition to
serving as Chief Operating Officer of the Media Group from 2011 to
2014. Mr. Bascobert joined Bloomberg from Dow Jones & Co. where
he was Senior Vice President of Operations from 2006 until 2007 and
Chief Marketing Officer from 2007 until 2009.
The combined company’s Board of Directors will have nine
members, including Mr. Reed as Chairman, five independent directors
from New Media, and three independent directors from Gannett. Mr.
Kevin Sheehan, who currently serves as New Media’s Lead Director,
will serve as the combined company’s Lead Director. New Media has
been actively engaged in a director search and expects to announce
two additional independent directors prior to closing. The
companies believe that diversity can strengthen board performance
and New Media is actively searching for women and other candidates
with diverse backgrounds and experiences.
After the closing of the Merger, both New Media and its
operating subsidiary GateHouse, will be rebranded and operate under
the “Gannett” brand. The combined company will be headquartered in
McLean, Va., with a continued corporate presence in existing
locations.
Financing
New Media expects to fund the cash portion of the Merger
consideration through a combination of cash on the balance sheet
and a new term loan facility (the “Term Loan”) to be funded at
closing pursuant to a binding commitment from funds managed by
affiliates of Apollo Global Management, LLC (NYSE:APO), a global
alternative investment manager with approximately $312 billion in
assets under management, as of June 30, 2019, and deep experience
in supporting media companies. The Term Loan, which will be used to
retire existing financial debt obligations of both companies and to
fund the cash component of merger consideration, will be a
five-year senior secured term loan facility in an aggregate
principal amount of $1.792 billion. The Term Loan will be freely
pre-payable without penalty, and the combined company is expected
to have a strong cash-flow profile that will permit aggressive
deleveraging. Total pro forma leverage at closing of the Merger is
expected to be approximately 3.5x LTM As Adjusted EBITDA, before
run-rate synergies, and 2.3x including run-rate synergies. Target
net leverage within two years of closing is expected to be below
1.75x.
Dividend
Initially, the combined company is expected to have an annual
dividend of $0.76 per share. It is expected that the dividend will
be increased over time as synergies are realized and leverage is
reduced.
External Management
Agreement
Concurrent with the entry into the Merger Agreement, New Media
and the Manager have agreed to amend the Management and Advisory
Agreement dated as of March 6, 2015 (such amendment, the “Amended
Management Agreement”), pursuant to which the Manager provides a
management team (including the Chief Executive Officer) and other
professionals who provide services to New Media.
The Amended Management Agreement, which will become effective
upon the closing of the Merger, provides for the following key
changes:
1.
Establishes a termination date of
December 31, 2021, for the Manager’s services in lieu of annual
renewals of the term;
2.
Reduces the incentive fee rate
from 25% to 17.5% for the remainder of the term;
3.
Reduces by 50% the number of
options that would otherwise be issuable in connection with the
issuance of shares as consideration for the Merger, and imposes a
premium on the exercise price;
4.
Eliminates the Manager’s right to
receive options in connection with future equity raises; and
5.
Eliminates certain payments
otherwise due at or after the end of the term.
In exchange, New Media will issue to the Manager upon closing
approximately 4.2 million shares of New Media common stock. The
Manager is restricted from selling these shares until the
expiration of the Amended Management Agreement, or otherwise upon a
change in control and certain other extraordinary events. New Media
will also grant the Manager approximately 3.2 million options with
an exercise price of $15.50, a 45% premium to the closing price of
New Media common stock on August 2, 2019. These options become
exercisable upon the first trading day immediately following the
first 20 consecutive trading day period in which the closing price
of New Media’s common stock (on its principal U.S. national
securities exchange) is at or above $20 per share, and also upon a
change in control and certain other extraordinary events.
Upon expiration of the term of the Amended Management Agreement,
the Manager will cease providing external management services to
New Media, and the Manager will no longer be the employer of the
person serving in the role of Chief Executive Officer of the
combined company (the “Internalization”).
Timing and Approvals
New Media formed the Transaction Committee to review, evaluate,
and negotiate the Merger and the Internalization (including the
terms of the Amended Management Agreement). The Merger has been
unanimously approved by the New Media Transaction Committee and by
the Boards of both companies. The New Media Transaction Committee
separately, and unanimously, approved the Amended Management
Agreement.
The Merger is expected to close by the end of 2019, subject to
the satisfaction of customary closing conditions, including receipt
of regulatory clearances and approval by the shareholders of each
company.
Advisors
Credit Suisse is serving as financial advisor to New Media, and
Cravath, Swaine & Moore LLP is serving as principal legal
counsel. New Media’s Transaction Committee retained Jefferies LLC
as its independent financial advisor, and Wilson Sonsini Goodrich
& Rosati as its legal counsel.
Greenhill & Co., LLC and Goldman Sachs & Co. LLC are
serving as financial advisors to Gannett, and Skadden, Arps, Slate,
Meagher & Flom LLP and Nixon Peabody LLP are serving as legal
counsel.
Joint Conference Call and
Webcast
New Media and Gannett will co-host a conference call to discuss
the transaction and second quarter earnings on August 5, 2019 at
4:15 p.m. Eastern Time. Supplemental information regarding the
transaction will be posted to the Investor Relations section of
each company’s website.
All interested parties are welcome to participate. The
conference call may be accessed by dialing 1-855-319-1124 (from
within the U.S.) or 1-703-563-6359 (from outside of the U.S.) 10
minutes prior to the scheduled start of the call; please reference
access code “3747329.” A simultaneous webcast of the conference
call will be accessible to the public on a listen-only basis
through each company’s website. Please visit www.newmediainv.com
and www.gannett.com.
The webcast replay of the conference call will also be available
approximately two hours following the completion of the call on the
Investor Relation section of each company’s website.
About New Media
New Media Investment Group Inc. (NYSE: NEWM) supports small to
mid-size communities by providing locally-focused print and digital
content to its consumers and premier marketing and technology
solutions to small and medium business partners. New Media is one
of the largest publishers of locally based print and online media
in the United States as measured by its 154 daily publications. As
of June 30, 2019, New Media operates in over 600 markets across 39
states reaching over 21 million people on a weekly basis and serves
over 200,000 business customers. For more information regarding New
Media and to be added to its email distribution list, please visit
www.newmediainv.com.
About Gannett
Gannett Co., Inc. (NYSE: GCI) is an innovative, digitally
focused media and marketing solutions company committed to
strengthening communities across its network. With an unmatched
local-to-national reach, Gannett touches the lives of more than 125
million people monthly with its Pulitzer-Prize winning content,
consumer experiences and benefits, and advertiser products and
services. Gannett brands include USA TODAY NETWORK with the iconic
USA TODAY and more than 100 local media brands, digital marketing
services companies ReachLocal, WordStream and SweetIQ, and U.K.
media company Newsquest. To connect with Gannett, visit
www.gannett.com.
No Offer or Solicitation
This communication is neither an offer to sell, nor a
solicitation of an offer to buy any securities, the solicitation of
any vote or approval in any jurisdiction pursuant to or in
connection with the proposed transaction or otherwise, nor shall
there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended, and otherwise in accordance with applicable law.
Cautionary Statement Regarding
Forward-Looking Statements
Certain statements in this communication may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 that reflect New Media’s
and Gannett’s current views regarding, among other things, the
proposed transaction between New Media and Gannett, the expected
timetable for completing the proposed transaction, the benefits and
synergies of the proposed transaction and future opportunities for
the combined company, as well as other statements that are other
than historical fact. Words such as “anticipate(s),” “expect(s),”
“intend(s),” “plan(s),” “target(s),” “project(s),” “believe(s),”
“will,” “aim,” “would,” “seek(s),” “estimate(s)” and similar
expressions are intended to identify such forward-looking
statements.
Forward-looking statements are based on New Media’s and
Gannett’s respective management’s current expectations and beliefs
and are subject to a number of known and unknown risks,
uncertainties and other factors that could lead to actual results
materially different from those described in the forward-looking
statements. Neither New Media nor Gannett can give any assurance
that its expectations will be attained. The actual results,
liquidity and financial condition may differ from the anticipated
results, liquidity and financial condition indicated in these
forward-looking statements. These forward-looking statements are
not a guarantee of future performance and involve risks and
uncertainties, and there are certain important factors that could
cause actual results to differ, possibly materially from
expectations or estimates reflected in such forward-looking
statements, including, among others:
- the parties’ ability to consummate the proposed transaction and
to meet expectations regarding the timing and completion of the
proposed transaction;
- the satisfaction or waiver of the conditions to the completion
of the proposed transaction, including the receipt of the required
approval of New Media’s stockholders and Gannett’s stockholders
with respect to the proposed transaction and the receipt of
regulatory clearances required to consummate the proposed
transaction, in each case, on the terms expected or on the
anticipated schedule;
- the risk that the parties may be unable to achieve the
anticipated benefits of the proposed transaction, including
synergies and operating efficiencies, within the expected
time-frames or at all;
- the risk that the committed financing necessary for the
consummation of the proposed transaction is unavailable at the
closing, and that any replacement financing may not be available on
similar terms, or at all;
- the risk that the businesses will not be integrated
successfully or that integration may be more difficult,
time-consuming or costly than expected;
- the risk that operating costs, customer loss and business
disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or
suppliers) may be greater than expected following the proposed
transaction;
- general economic and market conditions;
- the retention of certain key employees; and
- the combined company’s ability to grow its digital marketing
and business services initiatives, and grow its digital audience
and advertiser base.
Additional risk factors that could cause actual results to
differ materially from expectations include, but are not limited
to, the risks identified by New Media and Gannett in their
respective most recent Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. Such
forward-looking statements speak only as of the date on which they
are made. Except to the extent required by law, New Media and
Gannett expressly disclaim any obligation to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in their expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
Additional Information and Where to
Find It
This communication may be deemed to be solicitation material in
respect of the proposed transaction between New Media and Gannett.
The proposed transaction will be submitted to New Media’s
stockholders and Gannett’s stockholders for their consideration. In
connection with the proposed transaction, New Media intends to file
with the SEC a registration statement on Form S-4 (the
“Registration Statement”), which will include a prospectus with
respect to shares of its common stock to be issued in the proposed
transaction and a joint proxy statement for New Media’s
stockholders and Gannett’s stockholders (the “Joint Proxy
Statement”), and each of New Media and Gannett will mail the Joint
Proxy Statement to their respective stockholders and file other
documents regarding the proposed acquisition with the SEC.
Stockholders of New Media and Gannett are urged to read all
relevant documents filed with the SEC, including the Registration
Statement and the Joint Proxy Statement, as well as any amendments
or supplements to these documents, carefully when they become
available because they will contain important information about the
proposed transaction. The Registration Statement, the Joint
Proxy Statement and other relevant materials (when they become
available) and any other documents filed or furnished by New Media
or Gannett with the SEC may be obtained free of charge at the SEC’s
web site, http://www.sec.gov. Copies will also be available at no
charge in the “Investor Relations” sections of New Media’s website,
www.newmediainv.com and Gannett’s website, www.gannett.com.
Participants in
Solicitation
New Media and Gannett and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the holders of shares of New Media
common stock and holders of shares of Gannett common stock in
respect of the proposed transaction. Information about the
directors and executive officers of New Media is set forth in the
proxy statement for its 2019 Annual Meeting of Stockholders, which
was filed with the SEC on April 12, 2019. Information about the
directors and executive officers of Gannett is set forth in the
proxy statement for its 2019 Annual Meeting of Stockholders, which
was filed with the SEC on March 26, 2019. Investors may obtain
additional information regarding the interest of such participants
by reading the Registration Statement and the Joint Proxy Statement
(once available). You may obtain free copies of these documents
using the sources indicated above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190805005547/en/
Ashley Higgins, New Media Investor Relations ir@newmediainv.com
(212) 479-3160 or Media: Jonathan Gasthalter/Nathaniel Garnick
Gasthalter & Co. (212) 257-4170 Or Investors: Sam Levenson
Arbor Advisory Group (203) 307-2250 Stacy Cunningham, Gannett Vice
President, Financial Planning & Investor Relations
investors@gannett.com (703) 854-3168 Or Ed Trissel / Tim Ragones /
Tanner Kaufman Joele Frank, Wilkinson Brimmer Katcher (212)
355-4449
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