Tribune Dutch Auction Results Provide Near-Term Support
Tribune (TRB) shares had a big pop last Tuesday after the company announced results of its dutch auction. There was no follow-through since then and the shares are trading just below the $32.50 price at which the tender was complete.
TRB is buying 45 million shares at $32.50, the top end of auction range. The company was willing to purchase 53 million shares, so the auction was not fully subscribed. The next step in the company’s recapitalization is the purchase of 10 million shares from the McCormick Foundation. After that, beginning in mid-July the company will purchase an additional 20 million shares in open market purchases. Open market purchases were originally expected to total 12 million. The larger amount serves to make up for the shortfall from the auction. In total, 75 million shares of 25% of the share base will be repurchased.
The best response I found to the results of the auction appeared in the business section of Wednesday’s Chicago Tribune where Bear Stearns analyst Alexia Quadrani states, “Now it is back to business as usual, and business as usual in the newspaper business is not that good.” The quote captures my own view of current fundamentals but given the high profile dissent of TRB’s new largest shareholder, the Chandler family, it is not clear that weak fundamentals mean that TRB shares will be a poor investment….