Gannett (GCI) Enters Agreement to Acquire ReachLocal (RLOC) for $4.60/Share in Cash
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Gannett Co., Inc. (NYSE: GCI) and ReachLocal, Inc. (NASDAQ: RLOC) announced today the execution of a definitive merger agreement whereby Gannett would acquire the outstanding shares of ReachLocal, Inc., for $4.60 per share in cash, via a tender offer. This represents a 188% premium to the unaffected closing price on Friday, June 24, 2016, and a total enterprise value of approximately $156 million. The transaction has been unanimously approved by the Boards of Directors of both companies and is expected to be completed in the third quarter of 2016. Gannett expects this transaction to be approximately neutral to earnings per share in its first full year and modestly accretive in its second full year.
Robert Dickey, Gannett president and chief executive officer said, “The acquisition of ReachLocal accelerates Gannett’s digital growth strategy, adding more than $320 million of annual digital revenue, the best digital marketing solutions technology in the market, and an outstanding and well-respected management team to Gannett’s digital business. ReachLocal’s focus on local small and medium sized businesses aligns well with Gannett’s local-to-national strategy and extends our reach into new local markets. This transaction represents an important step as we continue to transform our business to meet the changing needs of consumers and advertisers in today’s digital world. We are excited to welcome the talented ReachLocal team to Gannett and look forward to working with them to drive digital growth and create value for our stockholders.”
Initially, ReachLocal will expand Gannett’s digital revenue by roughly 50% with its more than 16,000 customers in markets throughout North America, Latin America, Europe and Asia/Pacific. At the conclusion of Gannett’s current digital services arrangement in its existing markets in mid-2017, the combined organization will benefit from leveraging ReachLocal’s best-in-class digital marketing services products in Gannett’s existing 107 local markets in the U.S. ReachLocal brings a diversified client base with home services, healthcare, automotive and professional services representing its largest vertical markets.
Sharon Rowlands, ReachLocal chief executive officer said, “We are excited to bring new market opportunities and scale to Gannett’s growing and important digital business. We believe that this powerful combination will drive growth and allow us to accelerate innovation, enabling the best and most complete digital marketing solutions in the market today.”
Under the terms of the agreement, a subsidiary of Gannett will commence a tender offer for all outstanding shares of ReachLocal for $4.60 per share in cash, which will remain open for at least 20 business days. The transaction is subject to customary closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and there being validly tendered and not withdrawn in the tender offer a majority of the outstanding ReachLocal shares. Shortly following the closing of the tender offer, in a second-step merger that will not require stockholder approval, Gannett will acquire all remaining ReachLocal shares.
The Raine Group LLC is serving as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to Gannett. Greenhill & Co., LLC is serving as independent financial advisor to Gannett’s board of directors. Citi is serving as exclusive financial advisor and Latham & Watkins LLP is serving as legal counsel to ReachLocal.
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Create E-mail Alert Related CategoriesCorporate News, Hot Corp. News, Management Comments, Mergers and Acquisitions, Trading Halts
Related EntitiesCiti, Earnings, Definitive Agreement
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