ST. LOUIS — Lee Enterprises Inc. agreed to acquire Pulitzer Inc. for $1.46 billion, or $64 a share, creating the nation's fourth-largest newspaper publisher.
Pulitzer put itself on the block in November. Gannett Co. was also named as a bidder for the company.
Lee Enterprises said late Sunday that the deal should immediately add to free cash flow. For the fiscal year ending Sept. 30, 2006, Lee Enterprises expects free cash flow per share to reach 50 cents.
Because of noncash charges for amortization of intangible assets, the transaction should dilute fiscal 2005 reported earnings by eight cents to 10 cents a share, excluding one-time transition costs and assuming a May 31 closing. In fiscal 2006, the deal should cut earnings per share by 10% to 11%, Lee Enterprises said.
Pulitzer operates 14 daily newspapers, including the St. Louis Post-Dispatch, founded by legendary publisher Joseph Pulitzer in 1878. The company also operates more than 100 weekly newspapers, shoppers and niche publications.
Lee Enterprises operates 44 daily newspapers, including the Wisconsin State Journal, the North County Times in California, and the Lincoln Journal Star in Nebraska.
The transaction will be financed by a $1.55 billion fully committed bank facility led by Deutsche Bank and SunTrust Bank.
"Although this transaction takes Lee's initial level of debt higher than it's been historically, we are confident that the combined cash flow of the business will enable us to return quickly to an investment grade profile," Lee Enterprises Chairman and Chief Executive Mary Junck said in a statement.
Lee Enterprises also will gain a small minority stake in the St. Louis Cardinals Major League Baseball team.
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