It’s Official: Tribune To Go Private At $34 A Share — If Sale Goes Through; Cubs To Be Sold

After months of the corporate equivalent of water torture, the Tribune Company will go private and sell its sports interests — including the Chicago Cubs — under the terms of a deal orchestrated by Chicago developer Sam Zell. He will invest $315 million of his own and while employees will hold all the common stock under what is known as an ESOP (employee stock option plan). As part of the deal:
— The plan is in two stages: 1) a cash tender offer for roughly 126 million shares at $34 per share funded by “incremental borrowings” and $250 million from Zell, expected to close in 2Q07. 2) A merger with the ESOP slated for 4Q07 close that would give the remaining shareholders $34 a share with Zell investing another $65 million.
— Zell will join the Tribune board upon completion of his initial investment and will become chairman once the deal is complete.
— Zell will hold a subordinated note and a warrant entitling him to acquire 40 percent of the common stock.
— The ESOP “immediately” will purchase $250 million of new Trib stock at $28 per share.
— A “ticking fee” begins for shareholders if the merger hasn’t closed by Jan. 1, 2008.
More details in the release.
Sports interests to be sold: At the same time, the board bowed to all kinds of pressure and agreed to sell Tribune’s sports interests to pay down debt. The Cubs will be sold following the 2007 season; no time set for the sale of the company’s 25 percent interest in Comcast SportsNet Chicago. Comcast could have first refusal on that.
Competing offer: Ron Burkle and Eli Broad never really got any respect from the Tribune board and this latest round was no different. The two argued that Zell got more detailed info to make his bids and were granted last-minute access to the same details — only to have their revised bid dissed for not being definitive.

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