Billionaires Eli Broad and Ron Burkle sweetened their offer Thursday for Tribune, surpassing the $8 billion bid made by real estate magnate Sam Zell just ahead of the deadline for the Chicago-based media company to announce its future plans, a person familiar with the offer told The Associated Press.
Broad and Burkle sent a letter to the Tribune board offering $34 per share in a recapitalization effort that would involve an employee stock ownership plan, said the person who was not authorized to disclose details and asked to remain anonymous.
The two Los Angeles billionaires also offered to contribute $500 million in cash to the deal.
The new bid from Broad and Burkle is valued at about $8.1 billion and represents an 11% premium over Thursday's closing share price of $31.53.
On its face, the revised offer exceeds Zell's bid of $33 per share, although full details of the Broad/Burkle bid were not known. It came after the stock market closed and ahead of Saturday's deadline imposed by Tribune to announce how it plans to increase shareholder value.
The offer by Chicago entrepreneur Zell had been thought to be the company's favored choice.
The nation's second-largest newspaper publisher by circulation 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, Broad spokeswoman Karen Denne and Tribune spokesman Gary Weitman all declined to comment on the latest bid. A call to a spokesman for Burkle was not immediately returned.
Last year, Broad and Burkle had expressed an interest in buying the Los Angeles Times from Tribune, as had billionaire David Geffen.
But a day after Tribune replaced Times editor Dean Baquet for defying demands to make further staff cuts at the paper, Broad and Burkle made a joint offer for the entire company, which also includes the Chicago Tribune, nine other daily newspapers, 23 TV stations and the Chicago Cubs baseball team.
The previous offer was also a recapitalization plan valued at about $34 per share and included the two men contributing $500 million in cash. The offer also included significant debt that would allow a dividend payment to shareholders of $27 a share. Shareholders were to retain a majority stake in Tribune, while Broad and Burkle would have received about a 30 percent interest in Tribune and seats on the board.
Tribune initially balked at that offer and others and was thought to be favoring the management-backed self-help plan. Then Zell made his offer earlier this month, after the company's deadline for bids had passed.
Tribune signaled its willingness to sell all or part of the company in September after being pressured by several large shareholders angered by its lagging stock price and sagging fortunes.
Chief among those shareholders were members of the Chandler family, which owned the Los Angeles Times for decades before selling its parent, Times Mirror, to Tribune in 2000 for $6.5 billion.
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 Inc. in 1989, then sold the company to AIG 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 Cos. investment firm, joined forces with union workers at nine Knight Ridder Inc. newspapers in an effort to buy that chain.
When Knight-Ridder eventually sold to The McClatchy Co., which sold 12 papers it didn't 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 purchased the chain, then bought and sold larger companies, including Ralphs supermarkets. His wealth is estimated at $2.3 billion.