Debt to read

14 March 2006 By Rob Cox Follow @rob1cox

Most US newspaper publishers have capital structures that suggest growth ahead when there isn t any. In that sense, McClatchy is doing to Knight Ridder what the publisher should have done to itself by adding leverage.

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McClatchy, a US newspaper publisher, agreed to pay $4.5bn in stock and cash, plus $2bn of assumed debt, to acquire Knight Ridder, a rival chain. McClatchy is paying $67.25, including $40 a share in cash and the remainder in Class A stock.

It will sell 12 newspapers with ebitda of about $220m, including the Akron Beacon Journal and San Jose Mercury News. It will keep the Miami Herald, Kansas City Star, Charlotte Observer and other newspapers.

The group said it expects to reap $60m worth of synergies from the combination.

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