Will Zell Press for a Tribune Buyout?

Shares of the media outfit moved higher Monday on news reports the real estate tycoon may be interested in buying the company

As Tribune Co. (TRB) grapples with the question of how to best revamp its ailing business, a well-heeled suitor may be waiting in the wings.

The Chicago media giant is mulling a last-minute takeover offer from the Chicago real-estate magnate Sam Zell, the Wall Street Journal and New York Times reported Feb. 26, citing anonymous sources. Investors bid up the Tribune's stock 0.7% to $30.92 per share on the New York Stock Exchange in afternoon trading on Feb. 26 after the reports about Zell.

After the struggling media company said it would take on $2 billion of debt to buy back up to a quarter of its stock, its major shareholder the Chandler family objected, saying in June that the Tribune should separate its newspaper and TV businesses and explore other options (see BusinessWeek.com, 6/20/06, "The Trouble at Tribune"). In September the Tribune said it would form a committee to come up with ideas and announce a decision during the first three months of 2007.

One plan the company has considered would include the spin-off of its TV stations and the buyout of the Chandler's stake in the company, both the Journal and the Times reported.

Zell had first approached Tribune with "a complicated proposal that may include taking an equity stake in the company while adding debt to fund a large dividend for shareholders," the company's flagship newspaper the Chicago Tribune had reported on Feb. 6. A source said Zell had spoken with the Tribune's second-largest shareholder, McCormick Tribune Foundation, about his interest in trying to structure a deal, the newspaper said. "It's short of making a bid and more 'Would you be interested in doing XYZ?'" the source said, according to the Tribune.

Zell is already knee deep in the rampant consolidation activity that has been taking place in recent months. The company Zell founded, Equity Office Properties Trust, announced on Nov. 19 that it was selling itself to Blackstone Group for $36 billion, including debt. A bidding battle with Vornado Realty Trust ensued and the company ended up saying Feb. 7 that it had agreed on a $22.9 billion offer from Blackstone, plus Equity Office's $16 billion debt to the deal (see BusinessWeek.com, 2/7/07, "At Last, Blackstone Bags Equity Office").

Megan Hayden-Hakes, a spokeswoman from Reputation Partners, which represents Sam Zell's real estate private equity firm Equity International, declined comment on the matter. Tribune spokesman Gary Weitman said his company isn't commenting about its strategic review process.

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