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The Zell Tolls for Thee, Tribune

By Shannon in News on Apr 1, 2007 5:18PM

tribune tower at sunsetToday's finally the day for the Chicago Tribune. ... Well, most likely. After deliberations Saturday bore little fruit, the Trib's full board of directors is scheduled to meet today to decide on a buyer of the internationally-renowned media outlet. You may recall that as recently as a couple months ago, investors expressed little interest in becoming owners of the Trib, the Los Angeles Times, WGN and the Chicago Cubs, among other subsidiaries. But now, the company's got two suitors lined up to take a crack at that sweet, sweet MSM honey.

Sam Zell, a Chicago-based real-estate investor, has had middling interest in buying for some time. Only recently has he put forth a price of $33 a share, plus $300 million of his own money. Everything looked like it was a done deal, but in a move similar to the CBOT/CME/ICE cluster, Tribune Company received an offer on Thursday from L.A.-based investor team Eli Broad and Ron Burkle, dabblers in real estate and supermarkets respectively, who upped the ante to $34 a share and $500 million in cash. (We feel like we're in the middle of a Monopoly game.) A story coming out of the Trib today suggests the board's leaning towards Zell despite his cheaper bid, if only because he's been dealing with the company for a while and most of the details are already hammered out.

Complicating the whole thing is the fact that both bidding parties would introduce a new employee stock ownership plan, or ESOP. Although used often in business plans, ESOPs can be extremely sketch for workers if the company's in danger. You've heard about ESOPs a lot in the news even if you haven't realized it. Some of the more infamous examples include United Airlines (billions of employee equity was wiped out when they filed for bankruptcy in 2002) and Enron (we all know how that turned out). With the state of MSM outlets today, that doesn't look too appetizing for the workers. Trib. Co. can still pull an "F U" and restructure internally, if it comes to that. We believe they'll take any deal that doesn't involve selling the Cubs ... sorry, Sun-Times.

Image via Asten.