- Becomes Country's Second Largest Newspaper Publisher
$6.5 Billion Deal Unites Two Historic Franchises Focused on Great Journalism
New McClatchy Will Serve 30 Markets Growing 50% Faster Than U.S. Average
McClatchy Will Divest Select Papers Outside its Strategic Objectives
SACRAMENTO, Calif. and SAN JOSE, Calif., March 13 /PRNewswire-FirstCall/
-- The McClatchy Company (NYSE: MNI) of Sacramento, CA and Knight-Ridder, Inc.
(NYSE: KRI) of San Jose, CA today announced they have signed a definitive
agreement under which McClatchy will acquire Knight Ridder in a transaction
valued at $67.25 per share consisting of $40.00 in cash and a fixed fraction
of .5118 of a Class A McClatchy share. The transaction values Knight Ridder at
approximately $6.5 billion, including approximately $2.0 billion in assumed
debt at closing.
The expanded McClatchy Company will have 32 daily newspapers and
approximately 50 non-dailies after the planned sale of 12 Knight Ridder
papers. McClatchy's dailies will then have a combined daily circulation of
about 3.2 million, making it the nation's second largest newspaper company
measured by daily circulation. McClatchy stated that it would have had 2005
pro forma revenues of $2.83 billion and combined pro forma EBITDA of $754
million assuming full year ownership of all retained papers, after planned
divestitures which contribute $219 million of EBITDA, and before cost
synergies. The transaction is expected to be accretive to free cash flow (net
income after adding back depreciation and amortization, minus capital
expenditures) in the mid-teens percent and dilutive to GAAP earnings per share
in the mid-single digit range in the first year after closing, becoming EPS
accretive by 2008.
As a result, McClatchy will own leading newspapers in many of the fastest
growing markets nationwide. Papers to be added through this transaction
include the Miami Herald, Kansas City Star, Fort Worth Star-Telegram and
Charlotte Observer. They will join McClatchy's 12 papers serving cities like
Minneapolis, MN; Sacramento, CA; and Raleigh, NC. In addition, McClatchy
combined with Knight Ridder will have an expanded network of valuable internet
assets including the national Real Cities network, a one-third stake in the
leading jobs site CareerBuilder, and other attractive interactive businesses.
Capturing A Broader Audience
"Opportunities like this come perhaps once in a company's lifetime, and
we're thrilled to have this chance to extend McClatchy journalism and our
proven newspaper operations to 20 high-quality newspapers in high-growth
markets," said Gary Pruitt, Chairman and Chief Executive Officer of McClatchy.
"Our two companies operate in the finest traditions of American journalism,
devoted to independent, public interest reporting and the highest ethical
values. Combining the two creates a company particularly well-positioned to
lead the way in a changing media landscape. It's truly a chance for McClatchy
to do more of what it does best."
The acquisition builds on McClatchy's track record of successfully
acquiring and integrating newspapers. The company first moved beyond its
California base by acquiring The Anchorage Daily News in 1979. It later added
the News Tribune (Tacoma) in 1986; the News & Observer (Raleigh) in 1995; the
Star Tribune (Minneapolis) in 1998; and Sun Star (Merced, CA) in 2004. The
Knight Ridder papers to be retained are a good geographic fit with McClatchy's
current portfolio, generally located in regions where McClatchy has deep
history and experience. Once integrated, the new McClatchy will operate the
leading local media companies in 30 of the country's premium growth markets,
each generally employing the market's largest news staff and largest sales
force, and enjoying the leading online presence and the largest share of local
advertising.
'A Similar Mission'
Knight Ridder Chairman and CEO Tony Ridder said, "Knight Ridder and
McClatchy share many similar -- and important -- values, most notably a
commitment to quality journalism, fairness to our employees and service to our
communities. The joining of so many Knight Ridder newspapers under
McClatchy's banner will enable them to continue to flourish in an environment
of excellence and integrity. This transaction, which represents an excellent
outcome for shareholders, also concludes a period of considerable uncertainty
for many of Knight Ridder's valued and dedicated employees, and I thank them
for their perseverance through it. For the 12 newspapers that will be sold,
the uncertainty is not over and I regret that very much."
Knight Ridder, which is based in San Jose, CA, is a leading communications
company with substantial newspaper and internet assets, including 32 daily
papers in 29 U.S. markets in addition to 50 non-daily newspapers, the Real
Cities national network of city and regional websites, and a strong Washington
bureau, which will serve the new McClatchy newspapers.
"This deal is a vote of confidence in the newspaper industry as well as
our mission-driven commitment to public interest journalism," Mr. Pruitt
added. "We strongly believe that good journalism is good business, but that
doesn't mean business as usual. We have the opportunity to apply tested,
successful management in some of the most promising markets in the country.
Although audiences get news in many new ways today, the appetite for
independent, useful information is greater than ever, and the opportunities
for a news company that meets these needs is unlimited."
As part of the transaction, McClatchy intends to divest 12 Knight Ridder
newspapers, mainly located in cities that do not fit the company's
longstanding acquisition criteria, chiefly involving growing markets. The
largest are the Philadelphia Inquirer and San Jose Mercury News. Others
include Knight Ridder's other Philadelphia paper, the Daily News; Akron Beacon
Journal (OH); Wilkes Barre Times Leader (PA); Aberdeen American News (SD);
Grand Forks Herald (ND); Ft. Wayne News - Sentinel (IN); Contra Costa Times
(CA); Monterey Herald (CA); and Duluth News Tribune (MN). The St. Paul Pioneer
Press (MN) is to be sold due to anticipated anti-trust concerns involving
McClatchy's (Minneapolis) Star Tribune.
"These are terrific publications but simply do not fit with our long-
standing acquisition and operating strategies," said Mr. Pruitt.
Terms and Conditions
Under the terms of the agreement, shareholders of Knight Ridder will
receive $40.00 in cash and a fixed fraction of .5118 of a share of McClatchy
Class A stock for a total per share consideration of $67.25 based upon the
closing price for McClatchy on March 10, 2006 of $53.24. At the transaction's
closing, McClatchy will have approximately 54.9 million Class A shares
outstanding and 26.2 million Class B shares. The transaction is subject to
customary terms and conditions, including approval by the Knight Ridder
shareholders and is expected to close in three to four months. Holders of
McClatchy Class B stock acting by written consent have adopted the merger
agreement, approved the issuance of the shares in the merger and approved an
amendment to McClatchy's restated certificate of incorporation to increase the
authorized Class A common stock from 100 million shares to 200 million shares
in connection with the merger. No further vote of McClatchy's stockholders is
required.
Knight Ridder generated $3.1 billion in revenue and $638 million in EBITDA
in 2005, pro forma for full year ownership of all Knight Ridder newspapers.
Based upon adjusted transaction value of $6.0 billion, after valuing Knight
Ridder's off balance sheet assets at approximately $500 million, the
transaction represents a multiple of 9.5x 2005 EBITDA, before taking into
account $60 million in pro forma cost synergies. Including these synergies,
the multiple is 8.7x 2005 EBITDA.
McClatchy will be adding two Knight Ridder directors to its board.
McClatchy will finance the transaction with a $3.75 billion bank debt
facility. It has received commitments from Bank of America, N.A. and JPMorgan
Chase Bank, N.A. to underwrite the financing for the purchase.
Credit Suisse served as financial advisor to McClatchy and Goldman, Sachs
& Co. and Morgan Stanley advised Knight Ridder in connection with this
transaction. Wilson Sonsini Goodrich & Rosati served as legal counsel to
McClatchy and Wachtell, Lipton, Rosen & Katz, and Skadden, Arps, Slate,
Meagher & Flom LLP served as legal counsel to Knight Ridder.
Investor and Analyst Call
McClatchy will host a call for investors and analysts on Monday, March 13,
at 10:00 AM (EST).
URL:
http://www.mcclatchy.com
Toll-Free Dial-In: 800-238-9007
International Dial-In: (719) 457-2622
Passcode: 4953143 (Dial *0 for technical assistance)
Please dial in 10 minutes prior to start time. Be aware that only
Microsoft Windows environments can support the visual portion of the
presentation and Internet Explorer is the recommended browser. Pop-up
blockers must be disabled to view the presentation. The audio and visual
slide presentation will also be accessible at McClatchy's website after the
call: http://www.mcclatchy.com
The McClatchy Company, headquartered in Sacramento, CA, is a leading
newspaper and internet publisher. It publishes 12 daily and 17 non-daily
newspapers located in western coastal states, North and South Carolina, and
the Twin Cities of Minneapolis/St. Paul. McClatchy has daily circulation of
1.4 million and Sunday circulation of 1.8 million. McClatchy's newspapers
include, among others, the Star Tribune in Minneapolis, the Sacramento Bee,
the Fresno Bee and the Modesto Bee in California, the News & Observer
(Raleigh, NC), the News Tribune (Tacoma, WA), the Anchorage Daily News and
Vida en el Valle, a bilingual Spanish weekly newspaper distributed throughout
California's Central Valley. McClatchy also operates leading local websites in
each of its daily newspaper markets, offering readers information,
comprehensive news, advertising, e-commerce and other services, and owns and
operates McClatchy Interactive, an interactive operation that provides
websites with content, publishing tools and software development. McClatchy is
listed on the New York Stock Exchange under the symbol (MNI).
Knight Ridder is one of the nation's leading providers of news,
information and advertising, in print and online. The company publishes 32
daily newspapers in 29 U.S. markets, with a readership of 8.5 million daily
and 11.0 million Sunday. It has Web sites in all of its markets and a variety
of investments in internet and technology companies. It publishes a growing
portfolio of targeted publications and maintains investments in two newsprint
companies. The company's internet operation, Knight Ridder Digital, develops
and manages the company's online properties. It is the founder and operator of
Real Cities (http://www.RealCities.com), the largest national network of city
and regional web sites in more than 110 U.S. markets. Knight Ridder and Knight
Ridder Digital are headquartered in San Jose, CA.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Statements in this press release regarding the proposed transaction
between McClatchy and Knight Ridder, the expected timetable for completing the
transaction, future financial and operating results, benefits and synergies of
the transaction, the divestiture plan, future opportunities for the company
and any other statements about McClatchy or Knight Ridder managements' future
expectations, beliefs, goals, plans or prospects constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Any statements that are not statements of historical fact (including
statements containing the words "believes," "plans," "anticipates," "expects,"
estimates and similar expressions) should also be considered to be forward-
looking statements. There are a number of important factors that could cause
actual results or events to differ materially from those indicated by such
forward-looking statements, including: the ability to consummate the
transaction, the ability of McClatchy to successfully integrate Knight
Ridder's operations and employees; the ability to realize anticipated
synergies and cost savings; and the other factors described in each of
McClatchy's and Knight Ridder's Annual Reports on Form 10-K for the year ended
December 25, 2005. McClatchy and Knight Ridder disclaim any intention or
obligation to update any forward-looking statements as a result of
developments occurring after the date of this document.
A reconciliation of non-GAAP financial measures to the corresponding GAAP
measure and a reconciliation of pro forma financial measures to actual
financial results are available in the Investor Relations section of our
website at http://www.mcclatchy.com/investor/gaap_nongaap/.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
McClatchy plans to file with the SEC a Registration Statement on Form S-4
in connection with the transaction, and McClatchy and Knight Ridder plan to
file with the SEC and mail to their respective stockholders an Information
Statement/Proxy Statement/Prospectus in connection with the transaction. The
Registration Statement and the Information Statement/Proxy
Statement/Prospectus will contain important information about McClatchy,
Knight Ridder, the transaction and related matters. Investors and security
holders are urged to read the Registration Statement and the Information
Statement/Proxy Statement/Prospectus carefully when they are available.
Investors and security holders will be able to obtain free copies of the
Registration Statement and the Information Statement/Proxy
Statement/Prospectus and other documents filed with the SEC by McClatchy and
Knight Ridder through the web site maintained by the SEC at http://www.sec.gov. In
addition, investors and security holders will be able to obtain free copies of
the Registration Statement and the Information Statement/Proxy
Statement/Prospectus when they become available from McClatchy by contacting
Investor Relations at http://www.mcclatchy.com, by mail to 2100 Q Street,
Sacramento, CA 95816 or by telephone at 916-321-1846 or from Knight Ridder by
contacting Investor Relations at http://www.knightridder.com, by mail to Suite
1500, 50 W. San Fernando St., San Jose, CA 95113 or by telephone at 408-938-
7838.
McClatchy and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of Knight
Ridder in connection with the transaction described herein. Information
regarding the special interests of these directors and executive officers in
the transaction described herein will be included in the Information
Statement/Proxy Statement/Prospectus described above. Additional information
regarding these directors and executive officers is also included in
McClatchy's proxy statement for its 2005 Annual Meeting of Stockholders, which
was filed with the SEC on or about March 28, 2005. This document is available
free of charge at the SEC's web site at http://www.sec.gov and from McClatchy
by contacting Investor Relations at http://www.mcclatchy.com, by mail to 2100
Q Street, Sacramento, CA 95816 or by telephone at 916-321-1846.
Knight Ridder and its directors and executive officers also may be deemed
to be participants in the solicitation of proxies from the stockholders of
Knight Ridder in connection with the transaction described herein.
Information regarding the special interests of these directors and executive
officers in the transaction described herein will be included in the
Information Statement/Proxy Statement/Prospectus described above. Additional
information regarding these directors and executive officers is also included
in Knight Ridder's proxy statement for its 2005 Annual Meeting of
Stockholders, which was filed with the SEC on or about March 24, 2005. This
document is available free of charge at the SEC's web site at
http://www.sec.gov and from Knight Ridder by contacting Investor Relations at
http://www.knightridder.com, by mail to Suite 1500, 50 W. San Fernando St.,
San Jose, CA 95113 or by telephone at 408-938-7838.
Contacts for The McClatchy Company:
Elaine Lintecum
916-321-1846
Cindy Leggett-Flynn or Ellen Gonda
Brunswick Group
212-333-3810
Contacts for Knight-Ridder, Inc.:
Polk Laffoon
408-938-7838
Judith Wilkinson or Sharon Goldstein
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
SOURCE The McClatchy Company
 back to top
Related links:
http://www.mcclatchy.com
http://www.knightridder.com
http://www.mcclatchy.com/investor/gaap_nongaap
http://www.RealCities.com
CONTACT:
For The McClatchy Company, Elaine Lintecum,
+1-916-321-1846; or Cindy Leggett-Flynn or Ellen Gonda, both of
Brunswick Group, +1-212-333-3810; or For Knight-Ridder, Inc.,
Polk Laffoon, +1-408-938-7838; or Judith Wilkinson or Sharon
Goldstein, both of Joele Frank, Wilkinson Brimmer Katcher,
+1-212-355-4449
|
