Wednesday, June 14, 2006

Tribune (TRB) Holder The Chandler Trusts Said They Will Not Tender Shares; Sees Worth $35+ in LBO

In an 13D filing on Tribune Co. (NYSE: TRB) 12% holder The Chandler Trusts said they do not intend to tender any shares in response to the tender offer announced by Tribune on May 30, 2006 and sent a letter to the board. The Trusts believe that the process by which the offer was presented and considered by the Tribune Board was fundamentally flawed, and that the offer is a purely financial device that fails altogether to address the real business issues facing Tribune. The Trusts said prompt and meaningful strategic action is required to preserve the premium value of the company’s franchises.

From the Filing:

"In the filing the group said, "As a result of this continued underperformance, Tribune not only trades at a steep discount to its peers but to its intrinsic value, as measured by a sum-of-the-parts analysis. Morgan Stanley and Bear Stearns research suggest a breakup value of $42 per share (as shown below), or a 50% premium over the pre-tender price of $28 per share. Prudential analysts suggest a similar price, pegging the value at $43 per share. Reflecting the premium value of the company’s properties, analysts at Ariel Capital, one of Tribune’s biggest stockholders, figure that Tribune shares would be worth $44 to $46 per share in a breakup involving a subsequent sale of the parts (Wall Street Journal, June 9, 2006). These four data points define a range of values resulting from sum-of-the-parts of $42 to $46 per share." ...

In addition, in light of inquiries received from very credible private equity firms, and the very liquid, low cost financing markets, it seems quite likely that a leveraged buyout could be accomplished at a price in excess of $35 per share. ...."


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