Hedge Fund Buys Stake In Tribune Publishing

Tribune Publishing’s largest shareholder, Michael Ferro, has sold his 25.2% stake in the Chicago-based newspaper company to hedge fund Alden Global Capital.

The deal announced Tuesday priced Ferro’s roughly 9 million shares at $13 per share, or about $117 million. That represents a premium of more than 30 percent to the stock’s closing price Tuesday.

“The Tribune Publishing Board of Directors looks forward to working with Alden to enhance our company’s value as the company continues to provide valuable journalism for our customers and communities,” David Dreier, Tribune Publishing’s chairman, said in a news release.

New York-based Alden Capital owns about 200 newspapers, including the Denver Post, through its control of the company Digital First Media. Earlier this year it made an unsuccessful hostile takeover bid to acquire Gannett. On Tuesday, Gannett completed a $1.2 billion merger with GateHouse Media, forming the largest newspaper chain in the U.S.

The acquisition of Ferro’s shares makes Alden the largest owner of Tribune Publishing. As part of the purchase, Alden is in discussions to add two seats to Tribune Publishing’s six-member board.

In an email to employees Tuesday evening, Tribune Publishing CEO Tim Knight said the sale was a “private transaction” between Ferro and Alden.

“A change of investor, even a large investor, will not have a direct impact on how we conduct our daily activities,” Knight said in the email. He declined further comment.

Launched in 2011, Digital First has become a major player in the challenged newspaper industry, backed by Alden, which specializes in distressed investments. The company has developed a reputation for fiscal austerity, implementing sweeping layoffs at the Denver Post and other newspaper holdings as print advertising declines in the face of digital competition.

Tribune Publishing also owns the Baltimore Sun; Hartford Courant; Orlando Sentinel; South Florida’s Sun Sentinel; the New York Daily News; the Capital Gazette in Annapolis, Maryland; The Morning Call in Allentown, Pennsylvania; the Daily Press in Newport News, Virginia; and The Virginian-Pilot in Norfolk, Virginia.