Glen Taylor’s effort to purchase the Star Tribune moved forward Wednesday with the signing of a purchase agreement between the Minnesota billionaire and the media company.
Star Tribune Publisher Mike Klingensmith called the agreement an “important milestone” and said he expects the sale to close around June 30.
“Work remains to be done, but we are increasingly confident of closing this transaction,” Klingensmith said.
The Star Tribune, the state’s largest media company, would join Taylor’s portfolio of more than 80 businesses worldwide. They include the Minnesota Timberwolves and dozens of companies in printing and other industries.
Taylor has said he will pay around $100 million in the deal. He could not be reached for comment Wednesday. Klingensmith declined to discuss details of the agreement, other than to say that they haven’t changed since both parties signed a letter of intent for a possible purchase almost two months ago.
“That’s significant,” Klingensmith said, “because as [Taylor’s representatives] go through due diligence, they thoroughly review our financials and look at our records and our contracts.”
At this point, Klingensmith added, the only thing that could sink the deal is a “material adverse change.”
The largest shareholders in the Star Tribune are Wayzata Investment Partners and GE Capital, which together own about 75 percent of the shares. The rest of the stock is owned by several dozen former creditors and other investors. Taylor’s offer is for 100 percent of the shares.
The sale would be a pivotal moment for the Star Tribune, which emerged from bankruptcy in 2009 with the challenge of reinventing itself for a digital audience while also publishing a strong print edition. Since then, the company has expanded its readership and stabilized its finances. The newspaper won two Pulitzer Prizes in 2013.
The company also has reduced a significant amount of debt, partly through the recent $38.5 million sale of five blocks it had owned in downtown Minneapolis. The land sale cleared the way for a $400 million office tower project near the new Vikings stadium, which is under construction.
Taylor, 73, has said he will not take a managing role with the Star Tribune, although he might put a family member on its board of directors. The company’s current management would remain in place.
Joel Kramer, a former publisher of the Star Tribune who is now the CEO and editor of MinnPost, said he was optimistic about the purchase because Taylor is a “local owner with deep pockets” who wants to retain Klingensmith.
“It’s a sign that he knows as an owner he needs a good manager to run it,” Kramer said.
Kramer credits Klingensmith, a former Time Inc. executive who grew up in Fridley, with stabilizing the Star Tribune’s revenue in a struggling industry while staying committed to good journalism, a balance that has proved difficult.
Ken Doctor, a news industry analyst at Newsonomics, said Taylor appears to have strong civic instincts and a long-term perspective regarding the Star Tribune. He is the right kind of owner for a newspaper in a shifting marketplace, Doctor said.
“It’s going to be bumpy the next three to five years — there are so many transitions in the news business,” he said. “It helps to have owners that aren’t skittish and hopefully would be willing to forgo some short-term profit if that’s necessary.”
McClatchy Co. bought the Star Tribune from the Cowles family in 1998 for $1.2 billion, which adjusted for inflation would be $1.74 billion today. When Avista Capital Partners bought the paper from McClatchy in 2006, the price had fallen to $530 million. That deal weighed the company down with debt just before the worst economic downturn since the Great Depression, contributing to the 2009 bankruptcy.
Reputation as shrewd, fair
R.T. Rybak, a onetime Star Tribune reporter and former Minneapolis mayor, negotiated with Taylor on behalf of the city over renovations at Target Center and the new Timberwolves practice facility. Rybak said he came away with great respect for Taylor, who he called a “tough, shrewd businessperson who has a deep sense of fairness.”
The decision to keep Klingensmith is an example of Taylor’s acumen, Rybak said. He called Klingensmith’s revival of the Star Tribune “one of the great Minnesota business success stories.”
Taylor is one of several Minnesotans on the annual Forbes list of the wealthiest Americans and has an estimated net worth of about $1.8 billion.
He heads Taylor Corp., a printing and marketing conglomerate based in North Mankato that he has spent decades building. It is among the country’s largest privately held companies and has annual sales of around $1.6 billion.
He also owns scores of other companies as well as the Timberwolves and the WNBA’s Minnesota Lynx.
Taylor would be the latest billionaire to buy a major U.S. newspaper. Last year, Amazon.com founder and CEO Jeff Bezos paid $250 million for the Washington Post, and Boston Red Sox owner John Henry paid $70 million for the Boston Globe and other media properties.
“I am very optimistic, and we are very fortunate that he is willing to take it on and keep the ownership in Minnesota,” Gov. Mark Dayton said. “He said he wants the paper to be fair, accurate and consistent. That would be my measure, as well.”