Gannett Co Inc , the publisher of USA Today, said it had abandoned plans to buy Tronc Inc , the publisher of the Chicago Tribune and the Los Angeles Times, after determining that the terms were not acceptable.
Tronc, whose shares were down 15.7 percent at $10.17 in early afternoon trading, said earlier on Tuesday that a deal was agreed in mid-September but Gannett later informed the company that its financing had encountered "an unexpected delay."
"Tronc remained a constructive partner to Gannett as it sought to complete its financing for the agreed upon purchase price, however, Gannett was unable to do so and terminated discussions," the company said.
A Gannett spokesman said a number of financing options were available, but the No. 1 U.S. newspaper publisher by circulation decided to terminate talks "after considering both accretion to shareholders and whether the terms make sense for the company."
"In the end the terms were not acceptable," the spokesman said in an email.
The final offer price has not been publicly disclosed, but the Wall Street Journal reported that the companies had recently agreed on a purchase price of $18.75 per share.
Gannett made an initial unsolicited offer of $12.25 per share for Tronc - formerly Tribune Publishing Co - in April, valuing the company at about $815 million. Its raised offer of $15 per share a month later was also rejected.
The abandonment of the bid comes as the newspaper industry consolidates in the face of declining circulation, rising costs, shrinking advertising revenue and a shift to digital content.
Up to Monday's close, Gannett's shares had lost about 50 percent of their value since it made its first offer for Tronc on April 25. Tronc's shares had gained 60 percent.
Gannett's shares were down 1.5 percent at $7.65.
(Reporting by Rishika Sadam, Supantha Mukherjee in Bengaluru and Jessica Toonkel in New York; Editing by Sriraj Kalluvila and Ted Kerr)