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New Media Investment to buy Gannett in cash, stock deal

As expected, New Media Investment Group Inc. agreed to buy USA Today owner Gannett Co Inc. in a cash-and-stock transaction.

Under terms of the agreement, Gannett shareholders will receive $6.25 in cash and 0.5427 of a New Media share for each Gannett share they hold, representing a total consideration of $12.06 per Gannett common share based on New Media's closing stock price as of Aug. 2 and a premium of about 18% to the five-day volume-weighted average price of Gannett shares as of that date

New Media will fund the acquisition through a combination of cash on the balance sheet and a new term loan facility from funds managed by affiliates of private equity firm Apollo Global Management LLC.

The combined company will be led by New Media CEO Michael Reed. Paul Bascobert, who has been appointed president, CEO and a director of Gannett, will become CEO of the combined company's operating subsidiary. Bascobert was most recently president of XO Group Inc. Gannett CFO Alison Engel is expected to become CFO of the combined organization upon closing.

The combined company's board will have nine members, including Reed as chairman, five independent directors from New Media and three independent directors from Gannett.

"Uniting our talented employees and complementary portfolios will enable us to expand our comprehensive, hyperlocal coverage for consumers, deepen our product offering for local businesses, and accelerate our shift from print-centric to dynamic multimedia operations," Reed said in an Aug. 5 statement.

Upon closing of the transaction, Gannett shareholders will hold about 49.5% of the combined company and New Media shareholders will hold approximately 50.5%. After the closing of the transaction, New Media and its operating subsidiary GateHouse Media LLC, will be rebranded and operate under the Gannett brand.

New Media said it formed the transaction committee to review, evaluate, and negotiate the merger and the internalization. The New Media transaction committee and the boards of both companies approved the merger deal, which is expected to close by the end of 2019, subject to the satisfaction of customary closing conditions, including receipt of regulatory clearances and approval by the shareholders of each company.

Credit Suisse is the financial adviser to New Media, and Cravath Swaine & Moore LLP is principal legal counsel. New Media's transaction Committee retained Jefferies LLC as its independent financial adviser and Wilson Sonsini Goodrich & Rosati as its legal counsel.

Greenhill & Co. LLC and Goldman Sachs & Co. LLC are financial advisers to Gannett, and Skadden Arps Slate Meagher & Flom LLP and Nixon Peabody LLP are legal counsel.