Tronc Inc. said on Wednesday it agreed to sell the Los Angeles Times, the San Diego Union-Tribune and some other newspapers to billionaire investor Patrick Soon-Shiong for $500 million cash.
The company said the move will lower debt, slash its pension liabilities and help it expand digital operations. Soon-Shiong, through his private investment vehicle Nant Capital LLC, became a major shareholder in the company in 2016. He currently owns about 3 percent of Tronc.
Shares of Tronc rose more than 37 percent to a four-year high of $24.74 in morning trading on the Nasdaq.
“This transaction allows us to fully repay our outstanding debt, significantly lower our pension liabilities and have a substantial cash position following the close of the transaction,” Tronc Chief Executive Justin Dearborn said in a statement.
Tronc’s digital assets will be organized under Tribune Interactive and be led by Ross Levinsohn, former publisher and chief executive of the Los Angeles Times who took an unpaid leave of absence last month following disclosure of sexual harassment allegations against him while he worked at other companies.
Tronc said an independent investigation did not find any wrongdoing.
Soon-Shiong, a South African-born surgeon, is part-owner of the Los Angeles Lakers basketball team and a founder of two drug companies, which he sold for a total of $8.6 billion.
Nant Capital will assume $90 million in pension liabilities in the deal, expected to close in the late first quarter or early second quarter of 2018.
The publications being divested, which also include some community-based publications, brought in about $470 million in net revenue for the twelve-month period ended September 30, 2017.
The Los Angeles Times, acquired by Tronc’s predecessor Tribune Co in 2000, has undergone several management changes and rounds of layoffs, reflecting a struggle by newspapers in general to adapt to digital media.
After the sales of the newspapers, Tronc will still own the Chicago Tribune, the New York Daily News, the Baltimore Sun and the Orlando Sentinel, among others.
Tribune Co spun off its newspaper assets in 2014 as Tribune Publishing, which in 2016 renamed itself as Tronc, short for ‘Tribune Online Content’.
In a separate statement on Wednesday, Tronc said it acquired a majority ownership stake in BestReviews, an online product review company based in San Francisco.