MCLEAN, Va. & WOODLAND HILLS, Calif.--(BUSINESS WIRE)--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.
About Gannett
Gannett Co., Inc. is a next-generation media company committed to strengthening communities across our network. Through trusted, compelling content and unmatched local-to-national reach, Gannett touches the lives of more than 100 million people monthly. With more than 120 markets internationally, it is known for Pulitzer Prize-winning newsrooms, powerhouse brands such as USA TODAY and specialized media properties. To connect with us, visit www.gannett.com.
About ReachLocal
ReachLocal, Inc. is an exceptional, innovative global company. It is headquartered in Woodland Hills, Calif., and operates in four regions: North America, Latin America, Europe, and Asia-Pacific. The company is the premiere provider of digital services for small and medium sized businesses in the markets it serves. Products include a full suite of digital services related to web presence, search, lead generation and advertising. Among the many ways ReachLocal helps clients is by creating a complete web presence, providing digital advertising solutions that optimize campaigns, and, through its ReachEdge™ lead conversion software, enabling clients to build leads and convert them into customers while tracking what marketing sources work best. For the past two years the company has earned Confirmit ACE Awards related to its Voice of the Customer Program and recently won a Bronze in the 2016 American Business Awards competition for its ReachDisplay InApp™ solution, which delivers location-based dynamic advertisements to consumer smartphones. In addition, ReachLocal was awarded the prestigious 2015 Google Quality Award in North America and several other markets it serves.
