Lee Enterprises Buys BH Media, Buffalo News From Berkshire Hathaway
January 29 2020 - 7:54AM
Dow Jones News
By Chris Wack
Lee Enterprises Inc. (LEE) said Wednesday it is buying Berkshire
Hathaway's BH Media Group publications and The Buffalo News for
$140 million in cash.
The companies said Berkshire Hathaway is providing $576 million
in long-term financing to Lee at a 9% annual rate. The proceeds
from the Berkshire financing will be used to pay for the
acquisition, refinance Lee's $400 million of existing debt, and
provide enough cash on Lee's balance sheet to allow for the
termination of Lee's $23 million revolving credit facility.
After the deal closes, Berkshire Hathaway will be Lee's sole
lender.
BHMG had 2019 revenues of $373.4 million and adjusted Ebitda of
$47.4 million. Lee has managed BHMG's publications since July 2018
under a management agreement. BHMG's real estate and cash are
excluded from the acquisition.
Lee said it expects $20 million to $25 million of anticipated
annual revenue and cost synergies.
"We had zero interest in selling the group to anyone else for
one simple reason: We believe that Lee is best positioned to manage
through the industry's challenges," said Warren E. Buffett, chief
executive of Berkshire Hathaway. "I am confident that our
newspapers will be in the right hands going forward."
Lee said the transaction will be immediately accretive to
earnings.
As part of the agreement, Lee will enter into a 10-year lease
for BHMG's real estate. The initial lease payment is $8 million
annually, payable in monthly installments, with Lee assuming
responsibility for the maintenance and expense associated with the
BHMG property.
Write to Chris Wack at chris.wack@wsj.com
(END) Dow Jones Newswires
January 29, 2020 07:39 ET (12:39 GMT)
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