Swiss billionaire Hansjoerg Wyss will drop out of a group that was bidding for Tribune Publishing Co., according to people familiar with the situation, dealing a setback to a $681 million takeover attempt.
Wyss had teamed up with Choice Hotels International Inc. Chairman Stewart Bainum Jr. on the $18.50-a-share offer, which topped a rival bid from hedge fund Alden Global Capital. But after conducting due diligence for the past two weeks, Wyss decided not to go forward with the proposal, according to the people, who asked not to be identified because the deliberations are private.
Wyss had initially agreed to put up $500 million toward the offer, with Bainum contributing $100 million, according to another person with knowledge of the matter.
A representative for Wyss declined to comment.
The Bainum-Wyss group, which called itself Newslight, was seen as friendlier to the publishing company’s news staff, since the investors have vowed to protect local journalism. Alden, which already owns 32% of Tribune Publishing, has a reputation for deep cuts at the companies it acquires. Tribune’s newspapers include the Chicago Tribune and New York Daily News.
Bainum has also done due diligence on the deal and remains committed to a bid, the people said. He is exploring alternative partnerships and financing, and has received inquiries in recent weeks from potential investors, according to the people.
Wyss, who has said that he doesn’t want to see another truth-telling newspaper go “down the drain,” was seen as a potential savior by Tribune journalists. The effort to recruit civic-minded bidders was spearheaded by two Chicago Tribune reporters who interviewed more than 100 people in the business and philanthropic world. They also published an essay in the New York Times predicting that a Alden takeover would create “a ghost version of the Chicago Tribune.”
When Wyss joined the Newslight bid, he had envisioned turning the Chicago Tribune into a national newspaper, a person familiar with his thinking said. But the due-diligence process indicated that such an idea would be difficult to execute, the person said.
Before the Newslight offer emerged, Tribune Publishing had agreed in February to be acquired by Alden. Bainum was initially part of that transaction, with a side deal that allowed him to acquire the Baltimore Sun and smaller newspapers in Maryland.
But Bainum and Alden disagreed over how they would share services in the time before the Maryland newspapers were fully independent of Tribune, and Bainum grew skeptical of Alden’s intentions in the deal, people familiar with the situation said in March.
Bainum then decided to pursue an acquisition of the whole company, with the help of like-minded backers. On April 5, Tribune Publishing said it would hold talks with Newslight about its $680.8 million bid, which it said was probably superior to Alden’s $634.8 million offer.©2021 Bloomberg L.P. Distributed by Tribune Content Agency, LLC