Donerail Group, a newly formed investment firm headed by former Starboard Value LP executive Will Wyatt, is in advanced negotiations to buy Chicago-based newspaper company Tronc, sources familiar with the deal said Thursday.
There is no certainty a deal will be struck, and sources said the financing might not be fully in place. But if a sale were to occur, it would mark the second change in control in less than three years for the company that owns the Chicago Tribune and other newspapers.
The Tribune reported Wednesday that a private equity firm had bid between $19 and $20 per share for Tronc, an offer that could total upward of $700 million for the entire company. Reuters on Thursday reported Donerail as a bidder.
Wyatt left hedge fund Starboard Value LP in June after three years, according to his LinkedIn profile. He was involved in several media investments for the New York-based firm, including taking a stake in Tronc as it was fending off a hostile takeover bid by Gannett in 2016, according to media reports at the time.
Starboard Value also bought a significant stake last year in Chicago-based Tribune Media as it was navigating its own proposed merger with Sinclair Broadcast Group. That deal fell through Thursday as Tribune Media ended the agreement and filed a $1 billion breach of contract lawsuit against Sinclair.
More recently, Wyatt served as a paid consultant in Tronc's $500 million sale of the Los Angeles Times and San Diego Union-Tribune to biotech billionaire Patrick Soon-Shiong, according to documents filed with the Securities and Exchange Commission. The deal was struck in February and closed in June, leaving Tronc virtually debt-free and with nearly $215 million in available cash on hand as of July 1, according to its second-quarter earnings report released Thursday.
Wyatt declined to comment Thursday. On an earnings call with analysts, Tronc executives said they would not take questions related to a potential bid for the company.
Tronc, formerly known as Tribune Publishing, also owns the Baltimore Sun, Hartford Courant, Orlando Sentinel, South Florida's Sun Sentinel, the New York Daily News, the Capital Gazette in Annapolis, Md., The Morning Call in Allentown, Pa., the Daily Press in Newport News, Va., and The Virginian-Pilot in Norfolk, Va.
Tronc's stock closed at $16.96 Thursday, up nearly 15 percent from Wednesday's opening price.