MANHATTAN (CN) – When Americans crack open their daily newspapers next year, it is likely that one out of six papers will be owned by a single company.
On Monday, GateHouse Media announced it will buy Gannett Co. for nearly $1.4 billion at $12.06 per share. The deal is for a combination of cash and stock.
The two media conglomerates will represent more than 260 daily newspapers in the United States, as well as more than 300 weekly newspapers. The print circulation of the new company will be 8.7 million circulation, easily dwarfing McClatchy, the second-largest newspaper company, by 7 million.
Under the deal, Gannett shareholders will hold about 49.5% of the new company’s stock, with GateHouse shareholders picking up the other 50.5%.
Rumors of the merger had been swirling in recent weeks, but similar rumors had floated over the past year of other investors vying to buy out Gannett.
Best known for its flagship paper USA Today, Gannett was itself a buyout machine once but has suffered a series of layoffs amid spurts of financial trouble.
Earlier this year the company thwarted another takeover attempt by hedge fund Digital First Media, which had been Gannett’s largest shareholder. Gannett’s board called the $1.36 billion proposal by Digital First Media unrealistic and said the hedge fund had undervalued it.
The merger with GateHouse meanwhile met Monday with unanimous approval from the Gannett board in. “We see numerous opportunities to leverage the combined company’s enhanced scale and financial strength to continue to drive growth in the digital future,” Gannett Board of Directors Chairman J. Jeffry Louis said in a statement.
Founded in 1906, Gannett has the motto “Local Is National.” Its stable has of 215 papers, 160 of which are in the United Kingdom, are read by 4.32 million subscribers.
GateHouse, which is owned by New Media Investment Group, has also seen a rough road the last few years. The company filed for Chapter 11 bankruptcy in 2013 but since then has acquired a number of local newspapers.
Prior to the merger, GateHouse boasted more than 400 daily and weekly newspapers and a total circulation topping more than 4.2 million nationwide.
Experts say the two companies have privately considered slashing up to $300 million in costs between them due to personnel and business-function overlap.
Mike Reed, the CEO of GateHouse’s parent company New Media Investment Group, will head up the new company, at least temporarily, as Gannett currently has no chief executive.
“We believe this transaction will create value for our shareholders, greater opportunities for our employees, and a stronger future for journalism,” Reed said in a statement. “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.”
The deal is expected to close by the end of the year, pending Justice Department approval.