Should You Buy It? Zell Gives Tribune an Extra

Tribune(TRB Quote) shareholders are set to vote Aug. 21 on a $8.2 billion takeover bid led by real estate investor Sam Zell. While the deal, announced in April, values the company at $34 a share, Tribune closed Tuesday at just $30.14.

Tribune already bought back 126 million shares, or 52% of the company, on June 5, as part of Zell's strategy. But a major hurdle remains between Zell and his second round of efforts to acquire Tribune's assets, which include 11 newspapers such as the Chicago Tribune and Los Angeles Times, in addition to 23 television networks and various Web sites.

Namely, three hedge funds that hold about $690 million of the company's 2% coupon convertible debt are claiming that Zell's intention to sell the Chicago Cubs baseball team, owned by Tribune since 1981, would violate covenants in the bond offering. ...