That was fast. A few months after
outlining an M&A focused growth strategy, Gannett (
GCI) is actually ‘walking the walk’
with the announced $280m buyout of the Journal Media Group (
JMG). The offer of $12 in cash per share represented a sizable premium of over 40% to the previous close. Readers of this site should be familiar with both companies as both are 2015 spinoffs and are part of the media/print split trend. Gannett’s independence came
during the ‘Summer of Spin’, but it retained the legacy parent company name after being spun off from the media business now known as TEGNA (
TGNA). Journal was formed a bit earlier this year after E.W. Scripps (
SSP) merged with Journal Communications and immediately spun off its combined print business into the Journal Media Group. Scripps shareholders need not worry though because despite the quick sale,
the tax free nature of that deal is expected to be retained and E.W. Scripps announced that it had received an unqualified tax opinion on that matter from the company.
The print space is ripe for consolidation and Gannett will continue taking advantage of its balance sheet in order to fuel growth via acquisitions. Some question whether or not the strategy can actually save the rapidly diminishing business, but others believe that scale is the right approach to building a sustainable business. Such massive shifts, or sea changes, are rare to observe, but should be interesting to watch.
Ultimately, a company from the Summer of Spin is involved in a takeover, but it’s not Baxalta (BXLT). Despite an initial collapse in share price post-spin, Journal shareholders will walk away from the spinoff as winners earning a nice return in a relatively short period of time.
Disclosure: Author holds no position in any stock mentioned.