McLEAN, Va. – Gannett Co. Inc. and Belo Corp. have entered into a definitive merger agreement for Gannett to acquire the multimedia company for $1.5 billion in cash and the assumption of $715 million in existing debt, for a total value of roughly $2.2 billion.
The transaction, which has been unanimously approved by both companies’ boards of directors, was announced on Thursday.
The acquisition of Belo’s broadcast portfolio will nearly double Gannett’s portfolio from 23 to 43 stations, creating the fourth-largest owner of major network affiliates in the United States, according to a Gannett release.
“Upon completion of the transaction, Gannett’s Broadcast segment will have greater geographic and revenue diversity, with 21 stations in the top 25 markets and will become the No. 1 CBS affiliate group, the No. 4 ABC affiliate group, and will expand its already No. 1 NBC affiliate group position,” said a company release.
Following the transaction, which is expected to be completed by the end of 2013, Gannett’s broadcast segment is expected to contribute more than half of the company’s pro forma total EBITDA and the digital and broadcast segments are expected to contribute nearly two-thirds when combined.
The company release said that the transaction is expected to generate roughly $175 million in annual run-rate synergies within three years of the closing date. The acquisition is also expected to generate “significant” free cast flow and be accredtive to non-GAPP earnings per share by about 50 cents within the first year.
“We are thrilled to bring together two highly respected media companies with rich histories of award-winning journalism, operational excellence and strong brand leadership,” Gracia Martore, president and CEO of Gannett, said in prepared remarks. “We have been successfully transforming Gannett into a diversified multimedia company with broadcast, digital and publishing components across high-growth markets nationwide, and this is another important step in the process.”
“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,” added Martore.
A.H. Belo Corp., the parent company of The Providence Journal, spun off from Belo Corp. in 2008 and will see no changes due to Gannett’s acquisition.