(Bloomberg) -- Tribune Publishing Co. jumped 9.5% after hedge fund Alden Global Capital said it made a nonbinding proposal this month to buy the rest of newspaper publisher at a valuation of $520 million.
Alden, which already owns 32% of Tribune, inquired about an acquisition at $14.25 a share in a letter sent to Tribune's board Dec. 14, it said in a filing dated Wednesday. The Wall Street Journal reported late Wednesday that Alden was seeking to buy Tribune, citing unidentified people familiar with the matter.
Shares of Tribune, the publisher of the namesake Chicago Tribune, the New York Daily News and other big-city newspapers, rose as much as $1.21 to $14 in New York trading Thursday. The company had a market capitalization of $467.3 million at Wednesday's close, meaning Alden's proposed price would be a roughly 11% premium.
A spokesman for Tribune didn't respond to a request for comment. Alden said in its filing that Tribune hasn't responded to the inquiry.
Though Alden in June extended a standstill agreement for its Tribune stake until June 2021, the pact allowed the hedge fund to buy more shares under certain conditions -- including rival acquisition approaches. Alden said in its letter that real estate investor Stewart Bainum Jr., chairman of Choice Hotels International Inc., expressed interest this month in buying some Tribune assets. Bainum couldn't immediately be reached for comment.
Tribune stock was down 2.8% for the year through Wednesday -- and 41% since February 2018. The decline shows what a tough period it's been for newspaper companies, which have faced sharp advertising declines with the rise of online marketing. Digital subscription revenue has increased but hasn't kept pace.
Alden bought a stake in Tribune a little over a year ago from former Tribune Chairman Michael Ferro. The hedge fund, through its backing of MNG Enterprises Inc., is known for aggressive cost cutting at newspapers in its portfolio. MNG tried to buy Gannett Co. last year but lost out to New Media Investment Group Inc., which promised that job losses wouldn't be severe.
Staffers at Tribune have worried that Alden's involvement with the company might mean more costs would be squeezed out of its newsrooms. Indeed, the pandemic-driven declines in ad revenue have evenslashed some of the newsrooms themselves: The New York Daily News permanently closed its Manhattan office in August.
Last January, two Chicago Tribune reporters published an op-ed in the New York Times, calling for “a civic-minded local owner or group of owners” and saying Alden's cost-cutting reputation could lead to “a ghost version of the Chicago Tribune.” No such local owner has emerged.
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