Updated below: If Knight Ridder follows the call of a major shareholder and goes on the block, who are the likely buyers. Merrill Lynch analyst Lauren Rich Fine surveys the landscape and finds strategic buyers more limited than usual: “In general, some of the newspaper companies may not want to increase their exposure to newspapers given the industry’s secular challenges. Specifically, Gannett is still likely to look at deals, but a new CEO may bring a different perspective. Tribune and New York are each wrestling with soft fundamentals and a weak stock price. McClatchy has stringent acquisition criteria, namely a focus on growth markets. Both Lee and Journal Register have financial leverage constraints, given recent acquisitions. E.W. Scripps and Washington Post have historically been more interested in acquiring non-newspaper operations.”
David Cole, editor and publisher of NewsInc, tells the SF Chronicle that the best buyer could be KR itself. His idea: the company cdould raise the money to buy out Private Capital Management at a premium. The investment firm’s 19 percent-stake of 12.8 million shares now are worth about $742 million, down $100 million or so from purchase.
Update: DJ Newswires: Craig Huber, newspaper industry analysts for Lehman Brothers: Private-equity money would have “a very hard time” making a transaction work in the theoretical range of 11 times to 12 times estimated earnings before interest, taxes, depreciation and amortization, or Ebitda, which would add up to an estimated take-out price of $6.1 billion to $6.8 billion, or $70 to $80 a share.
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