Newspaper Chains Gannett, GateHouse To Merge, Project $275-$300M In Annual Synergies

New Media Investment Group Inc. NEWM and USA Today parent company Gannett Co., Inc. CGI announced a definitive merger agreement Monday.

Per the agreement, Gannett shareholders will receive $6.25 in cash and 0.5427 of a New Media share for each Gannett share they hold.

Gannett shareholders will hold approximately 49.5% of the combined company and New Media shareholders will hold approximately 50.5% at the closing. 

The merger offers the opportunity for "run-rate cost synergies" of $275 to $300 million annually "in a judicious manner, while continuing to invest in the newsrooms," according to the companies.

"Uniting our talented employees and complementary portfolios will enable us to expand our comprehensive, hyperlocal coverage for consumers, deepen our product offering for local businesses and accelerate our shift from print-centric to dynamic multimedia operations," Michael Reed, New Media chairman and CEO, said in a statement. 

New Media is commonly known as GateHouse. 

The deal is in the best interests of Gannett shareholders, customers, audiences and employees, J. Jeffry Louis, the chairman of the board of the McLean, Virginia-based newspaper chain, said in a statement. 

“We see numerous opportunities to leverage the combined company’s enhanced scale and financial strength to continue to drive growth in the digital future. Importantly, we have found in New Media a strong partner and cultural fit for Gannett as we continue delivering on a shared commitment to journalistic excellence for the communities we serve.”

Gannett shares were up 2.6% at $11.04 at the close Monday. 

New Media shares were down 7.22% at $9.89. 

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Gannett headquarters in McLean, Virginia. Photo by Patrickneil/Wikimedia.