Story updated at 7:47 p.m. to confirm Gannett's purchase of Journal Media Group.
The Gannett Co., which owns the Nashville Tennessean and three other newspapers in Tennessee, said tonight it is buying Journal Media Group Inc., which owns the Knoxville News-Sentinel, the Memphis Commercial Appeal and 12 other daily newspapers.
Gannett, which owns 92 newspapers including USA Today and those in Nashville, Murfreesboro, Jackson and Clarksville in Tennessee, will pay $280 million to acquire the Milwaukee, Wisc.-based Journal Media. The merger will give Gannett ownership of six daily newspapers in Tennessee, including the state's three biggest papers, and extend its Midsouth footprint from Arkansas through Kentucky and Tennessee to western North Carolina.
"Our merger will combine the best of each of our organizations to create a journalism-led, investor-focused company which will provide substantial value to the shareholders of both companies," Gannett CEO Robert J. Dickey said in a statement tonight. "This transaction is an excellent first step in the industry consolidation strategy we have communicated to our shareholders and is a good example of the value-creating opportunities we believe are available."
In a statement tonight, Gannett estimates that the merger should save the combined company $25 million over the next two years from "consolidation of corporate and administrative operations, integration with the Gannett shared service centers and consolidation of certain printing and distribution assets in multiple adjacent markets."
Under the terms of the transaction, which was unanimously approved by the boards of directors of both companies and is subject to Journal Media Group shareholder approval, Journal Media shareholders will receive cash of $12 per share. Based on the closing price of Journal Media Group Wednesday, the purchase price represents a premium of 44.6 percent.
Gannett will finance the transaction through a combination of cash on hand and borrowings under Gannett's $500 million revolving credit facility.
Journal Media was created in April when the E.W. Scripps Company acquired Journal Communications, and spun out the publishing operations of both Scripps and Journal into a new company.
Tim Stautberg, president and chief executive officer of Journal Media Group, said the merger with Gannett "marks a critical next step in the transformation of our industry as we build local media brands that matter at a time when operational scale is a competitive advantage."
"We'll be better stewards in our local markets by sharing ideas, content and best practices among our new and larger family," he said.
Gannett's stock was up 3.5 percent for the day, and shares of the Journal Media Group rose 8.43 percent in after-hours trading.
For Tennessee readers, the purchase would leave the Chattanooga Times Free Press as the state's sole major daily newspaper not owned by Gannett. The Chattanooga Times Free Press is privately owned by WEHCO media, a family company.
Gannett's deal could represent the first wave of what analysts believe could become a cascade of consolidation in the newspaper industry.