Annotated article summary from this weekend's Barron's; receive all our Barron's summaries by signing up here:
The Man Who Didn't Come to Dinner by Jonathan R. Laing
Summary: Having recently sold his Equity Office Properties Trust (EOP) to Steve Schwarzman's Blackstone Group for $39 billion, rumors have it Sam Zell has set his sites on The Tribune Company's (TRB) newspaper and television empire. Barron's has learned from someone with knowledge of the Tribune auction that Zell's proposal is better than both those of LA Billionaires Ron Burkle and Eli Broad and 20% owner the Chandler family. The source says Zell wants to take the company private for about $13 billion, and act as its chairman. He will invest $300 million of his own money, and already has lenders' commitments for the rest of the money. The plan would see the bulk of the company owned by its employees through an employee stock-option plan [ESOP], saving it a bundle in taxes, which is what gives the plan the upper edge. Tribune itself has said it will decide by the end of the month whether to sell itself or recapitalize by spinning off its 23 TV stations and issuing debt, with the hope of buying down the Chandlers' stake to eliminate its 'abrasive presence.' While Tribune could theoretically mimic much of Zell's proposals itself, Barron's thinks Zell would likely have the upper hand over a board that has failed to gain shareholder confidence in recent years.