Hedge fund Alden looks to buy Baltimore Sun owner and go private in deal valuing newspaper chain at $520 million

Hedge fund Alden Global Capital is looking to buy Tribune Publishing and take the Chicago-based newspaper company private in a deal valued at $520 million.

Alden, which already owns 32% of the company that owns The Baltimore Sun and other news organizations, made a nonbinding proposal Dec. 14 to buy out other shareholders for $14.25 per share, according to a filing Thursday with the Securities and Exchange Commission.


“We are confident that we can move forward with negotiating definitive documentation for the Transaction immediately, with the goal of entering into a binding material definitive agreement within two to three weeks, which we believe would maximize value, speed and certainty for Tribune’s other stockholders,” Alden said in the filing.

Alden also said Maryland businessman and former state lawmaker Stewart Bainum Jr. has expressed interest in one or more of the newspaper chain’s assets. A joint transaction involving Alden, Bainum and Tribune “may be worth exploring for all interested parties,” Alden co-founder Randall D. Smith said in a letter to Tribune’s board.


Smith said Alden’s offer for Tribune is not contingent on reaching an agreement with Bainum, who is chairman of Rockville-based Choice Hotels International and former CEO of nursing home operator Manor Care. Bainum did not respond Thursday to a request for comment through his company.

Alden’s potential offer to buy Tribune represents an 11% premium to the stock’s $12.79 closing price Wednesday, and would require board and shareholder approval. Alden said in the filing it could finance the transaction with cash on hand and would not require third-party debt or equity to complete the deal.

In the SEC filing, Alden said it had “not received any feedback” from Tribune Publishing on its proposed acquisition.

In addition to The Baltimore Sun, The Capital Gazette in Annapolis, The Carroll County Times and several other Baltimore-area weeklies and magazines, Tribune Publishing owns the Chicago Tribune; Hartford Courant; Orlando Sentinel; South Florida Sun Sentinel; New York Daily News; The Morning Call in Allentown, Pennsylvania; the Daily Press in Newport News, Virginia; and The Virginian-Pilot in Norfolk, Virginia.

Tribune announced late Thursday that it has designated a special committee made up of three independent members of its board in response to the Alden proposal and to consider it. The committee has hired a financial advisor and legal counsel, Tribune said.

“No assurance can be given that Alden’s proposal, or any other transaction, will be consummated,” Tribune said in the statement. The company said it will not disclose developments unless the committee determines a need to update the market.

An Alden spokesman declined to comment beyond the filing.

A New York-based hedge fund with a reputation for sweeping layoffs at its newspaper properties, Alden owns about 200 publications through an operating company known as MediaNews Group. Its larger newspapers include the Denver Post, San Jose Mercury News and the St. Paul Pioneer Press.


Alden acquired its 32% stake in Tribune Publishing in November 2019, mostly through buying former nonexecutive chairman Michael Ferro’s holdings. In total, Alden purchased 11.5 million shares of Tribune Publishing for $145.4 million.

In the Dec. 14 letter to the Tribune Publishing board, which was included in the regulatory filing, Alden said combining the two newspaper chains creates value that justified offering a premium price for Tribune Publishing’s outstanding shares.

“We believe that, as a private company, Tribune would be able to unlock significant strategic and financial value, thereby allowing us ... to make an offer to acquire all of the common stock of Tribune not already owned by Alden,” the company said.

Launched in 2007, the hedge fund turned its focus to newspapers during the Great Recession, buying stakes in companies that had declared bankruptcy such as MediaNews, Philadelphia Media Network and Journal Register.

In July, Tribune Publishing added Smith to the newspaper company’s board, while extending an ownership standstill agreement until June 2021. While the agreement ostensibly prevented a hostile takeover, it did not preclude Alden from making a tender offer to buy Tribune Publishing — with board approval.

Alden has three of seven seats on the Tribune Publishing board. It called for a special committee of independent directors to review the proposal, according to Thursday’s SEC filing.


In addition to board approval, Alden would need two-thirds of Tribune Publishing’s other shareholders to sign off on the deal, according to the filing. Much of that stake is held by two shareholders.

Los Angeles Times owner Patrick Soon-Shiong, Tribune Publishing’s second-largest shareholder with a 24% stake of the company, did not respond to a request for comment.

Mason Slaine, the third-largest shareholder with a 7.9% stake, said in an email Thursday that Alden’s $14.25 per share offer “seems low” given the company’s strong cash position.

Tribune Publishing had $90 million in cash at the end of September, according to its third-quarter financial filings.

The Evening Sun

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On Thursday, Tribune Publishing announced it had closed the sale of the BestReviews ecommerce website to TV station owner Nexstar Media Group for $160 million, further bolstering its cash position.

Tribune Publishing owned 60% of BestReviews and its founder, BR Holding, held 40%. Under the terms of the deal, Tribune Publishing will receive $96 million, less transaction fees and a working capital adjustment.


The company also released updated financial guidance Thursday for 2021, projecting $675 million to $690 million in revenue, with adjusted earnings of $105 million to $113 million. For 2020, Tribune Publishing expects to generate about $746 million in revenue, with adjusted earnings of about $73 million.

In his letter to Tribune’s board, Alden’s Smith asks Tribune’s independent directors to clarify aspects of the ownership standstill agreement reached in July before Alden would pursue further discussions with Bainum “to determine if a potential joint transaction is even possible or desirable.”

Smith said Alden had a brief conversation with Bainum Dec. 11. He also noted Bainum had previously been in touch with board members about his interest in some properties.

Bainum has been chairman since 1997 of Choice Hotels, founded by his late father Stewart Bainum Sr., overseeing its growth from a franchisor of 339 U.S. hotels under one brand to one of the largest hotel companies in the world with more than 6,900 properties.

He served as chairman and CEO of Manor Care from 1987 to 1998, when it merged with Health Care and Retirement Corp. A former Maryland state delegate and senator from 1979 to 1987, Bainum ran unsuccessfully for governor in the 1994 Democratic primary. He served as a delegate to the Democratic Conventions in 1984, 1992 and 2008.