Billionaires Eli Broad and Ron Burkle increased their bid for Chicago-based media company Tribune, offering a total deal that would exceed one currently being offered by real estate magnate Sam Zell, a person familiar with the offer told The Associated Press.
Tribune is the United States' second-largest newspaper publisher by circulation.
Broad and Burkle sent a letter to the Tribune board offering $34 per share in a recapitalization scheme that would involve an employee stock ownership plan, said the person Thursday. They asked to remain anonymous because they were not authorized to disclose details.
The two Los Angeles billionaires also offered to contribute $500 million (ñ374 million) in cash to the deal. The offer exceeds Zell's bid of $33 per share.
The competing offer by Zell had been thought to be the company's favored choice. Zell's bid is reportedly valued at about $8 billion, excluding debt.
Tribune is also said to be considering a "self-help" plan that would involve spinning off the company's broadcast division and borrowing money to pay a one-time cash dividend to shareholders.
Zell spokeswoman Terry Holt and Tribune spokesman Gary Weitman both declined to comment Thursday on the status of a possible sale to Zell.
Tribune owns the Chicago Tribune, the Los Angeles Times and nine other daily newspapers, as well as 23 TV stations and the Chicago Cubs baseball team.
Like most newspaper companies, Tribune has been struggling with declining profits, circulation and advertising revenue. Last week, the company announced its revenues fell 3.4% in February as its publishing division continued to struggle.
Zell, 65, is known for his ability to revive moribund properties. He has had a golden touch with real estate ever since he got his start managing apartment buildings as a college undergrad.
The blockbuster sale of Equity Office Properties Trust last month, which netted Zell about $1 billion, only enhanced that legend.
Zell has said his proposal calls for taking the media conglomerate private and that he does not intend to break it up, but he otherwise declined to disclose details.
Broad, 73, co-founded Kaufman and Broad, a home builder known now as KB Home. He bought a life insurance company in 1971 for $52 million, transformed it into a retirement planning powerhouse renamed SunAmerica in 1989, then sold the company to American International Group in 1999 for $18 billion. His net worth is estimated at $5.8 billion.
He has since taken a high profile role in boosting the arts in Los Angeles, contributing $18 million to help build the Walt Disney Concert Hall and donating $60 million to the Los Angeles County Museum of Art.
Burkle, through his Yucaipa investment firm, joined forces with union workers at nine Knight Ridder newspapers in an effort to buy that chain.
When Knight-Ridder eventually sold to The McClatchy Co., which sold 12 papers it did not want to keep, Yucaipa again teamed with the Newspaper Guild-Communications Workers of America to submit a bid.
The 53-year-old Burkle started as a bag boy in the supermarket chain where his father was an executive. He later bought the chain, then bought and sold larger companies, including Ralphs supermarkets. His wealth is estimated at $2.3 billion.