A Maryland hotel magnate behind an 11th-hour bid to acquire Tribune Publishing Co. is working to find new financing and partnership options after his partner withdrew from the deal, people familiar with the matter said.
Swiss billionaire Hansjörg Wyss, who had pledged to contribute over $500 million to the $680 million bid for the newspaper company, had a change of heart after reviewing Tribune's finances, the people said.
Mr. Wyss's decision dealt a blow to Choice Hotels International Inc. Chairman Stewart Bainum's move to outbid hedge fund Alden Global Capital LLC, the people said, though they said Mr. Bainum remains committed to finding ways to move ahead with the bid.
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Mason Slaine, a Florida investor who had earlier offered $100 million for the bid said in an interview Sunday that he had been contacted by Mr. Bainum's camp and that he remained interested in possibly taking part.
A special committee set up by Tribune's board previously had recommended shareholders accept Alden's offer of $635 million, but had said it would likely consider the competing $680 million bid led by Mr. Bainum to be superior if Messrs. Bainum and Wyss stood by it following the due diligence process and it remained fully financed. The departure of Mr. Wyss from the bid throws that into question and increases the chance that Alden will emerge as the winner without having to sweeten its offer.
The committee was sent formal notice of Mr. Wyss's decision on Saturday, people familiar with the matter said.
Mr. Bainum, a billionaire whose company operates brands like Econo Lodge and Comfort Inn, had planned to commit $100 million of his own money to the bid. He is satisfied with the due diligence, some of the people said.
The battle between Mr. Bainum and Alden to acquire Tribune -- home to the Chicago Tribune, Baltimore Sun, New York Daily News and other U.S. metro newspapers -- could help shape the future of local news in America, an industry that is in steep decline. Alden has shown an appetite for acquisitions, betting scale and efficiency are the path forward for struggling papers, but critics say its aggressive cost-cutting is only accelerating the demise of local papers.
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Another option is to sell to ultrawealthy benefactors. That was the fate of the Washington Post, which sold to Amazon.com Inc. founder Jeff Bezos, as well as the Boston Globe and Minneapolis Star-Tribune.
Any buyer would be staring at a grim financial picture for local papers. Over the past 20 years, annual newspaper advertising revenue has plummeted by 70%, or $34 billion, according to estimates by the Pew Research Center, as readers have moved online and digital ad dollars have increasingly been spent on tech giants like Alphabet Inc.'s Google and Facebook Inc. More than 1,800 newspapers have closed since 2004, according to research by the University of North Carolina.
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If the effort by Messrs. Bainum and Wyss had been successful, they planned to break up Tribune -- with Mr. Bainum keeping the Baltimore Sun and Mr. Wyss taking control of the Chicago Tribune. The pair had envisioned selling the rest of Tribune's seven properties to local backers in each of the company's markets like Florida, Pennsylvania and Connecticut.
Mr. Bainum has received interest from buyers in various Tribune markets. Mr. Slaine, a technology investor from Florida who holds a minority stake in Tribune, told The Wall Street Journal in late March that he was willing to offer $100 million to support Mr. Bainum's effort in return for the Orlando Sentinel and Sun Sentinel in Fort Lauderdale. He wasn't included in the initial bidding group. On Sunday, Mr. Slaine said he had been contacted by Mr. Bainum's camp and that he remains interested in possibly joining the bid.
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Mr. Bainum has said that if his bid is successful, he intends to invest in the Baltimore paper and eventually donate it to a nonprofit trust he would create, people familiar with the matter have said. He originally had reached a side deal with Alden to acquire the Sun for $65 million as part of the hedge fund's takeover effort, but the arrangement fell apart and Mr. Bainum moved to launch his own bid.
Mr. Wyss, who founded a medical-device maker later bought by Johnson & Johnson and has in recent years made substantial donations to conservation efforts, had envisioned building the Chicago Tribune into a national brand that would compete with the New York Times and Washington Post. But he told Mr. Bainum that after reviewing the company's finances it appeared that that would be too difficult to accomplish, the people familiar with the situation said.