Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Gannett Bids for Britain's Newsquest

LONDON -- U.S. newspaper group Gannett Co. Inc. announced a pounds 904 million ($1.43 billion) cash bid Thursday for Britain's Newsquest PLC, marking Gannett's first major step into Europe since the early 1970s.

The offer of 460 pence per share for the regional newspaper group has already won backing from shareholders representing 51.7 percent of Newsquest shares, including 36 percent owner Kohlberg Kravis Roberts, the U.S. buyout group.

Gannett, owner of USA Today, said the bid is not the start of a major expansion drive into Europe.

"This is not a decision to expand into England or into Europe. It is a decision to just make a good acquisition of a newspaper company that fits our normal overall acquisition criteria," Douglas McCorkindale, vice chairman and president of Gannett, said in an interview.

Gannett, which is listed in New York with a market capitalization of about $20.5 billion, is paying for the British company from its own coffers, which stood at about pounds 1.8 billion last year.

It said the purchase, which is expected to be cash positive in the first year, will provide opportunities to improve the Internet operations of both companies for delivery of news and information on the electronic highway.

"It is a perfect fit for us and at this price it makes good sense to us and increases our shareholder value," said McCorkindale.

The group, which employs 39,400 people, currently publishes 74 daily newspapers and is the largest U.S. newspaper group in terms of circulation. Some 59 of its 74 newspapers currently have Internet web sites.

Newsquest, which owns the Northern Echo and Oxford Mail and is Britain's third largest regional newspaper publisher, is putting the offer forward for consideration to shareholders, but has fallen short of making an outright recommendation for shareholders to accept the deal.

The British group called the offer, which stands at a 9 percent premium to its closing share price on June 23, a serious and fair proposal worthy of consideration by shareholders.

Executive directors at Newsquest elected to sell their shares after Gannett offered the best price at an auction.

James Brown, chairman of Newsquest, said he does not anticipate any regulatory hurdles for the deal.