New Wrinkle in Tribune Deal

Burkle and Broad launch a rival bid that appears to top the proposal from Sam Zell.
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Shares of

Tribune

(TRB)

climbed 2% early Friday on news that California billionaires Ron Burkle and Eli Broad sweetened their bid for the publishing giant in last-minute negotiations, challenging a similar offer from Chicago real estate magnate Sam Zell.

The

Associated Press

reported late Thursday that Broad and Burkle sent a letter to the Tribune board offering $34 a share in a recapitalization effort that would involve an employee stock ownership plan. The story cited a source close to the talks.

Details remain under wraps, but the offer appears to be more generous than the latest $33-a-share proposal from Zell. His bid was perceived as the winner going into the final week of negotiations, partly because Tribune's board favored his employee stock ownership plan. The ESOP plan would put a majority of the company in the hands of its employees.

The Wall Street Journal

reported Friday that the letter to Tribune's board from Broad and Burkle said the business moguls would be "more than happy" to structure a deal using the ESOP model. Also,

The Journal

said that Burkle and Broad are proposing to contribute $500 million in equity for the deal, while Zell is offering $300 million.

Both offers call for the buyer to become chairman or co-chairmen of Tribune.

The latest wrinkle suggests that Tribune may have a bidding war on its hands, which bodes well for a sale process that up until now has been viewed as a disappointment.

While the company has said it will bring the process to resolution in its first quarter, which ends today, a source familiar with the negotiations told

TheStreet.com

that

the deadline is "soft" and may be extended.

Tribune has also considered a "self-help" plan that would involve spinning off its broadcast division and borrowing money to pay a one-time dividend to shareholders.

A spokeswoman for Broad declined to comment on negotiations. A spokesman for Burkle's investment firm, Yucaipa, could not be reached. A spokeswoman for Zell declined to comment, and representatives at Tribune could not be reached.

The company, which owns the

Los Angeles Times

, the

Chicago Tribune

and a slew of other media assets, launched a review of its strategic options last summer under pressure from its largest shareholder, the Chandler Family trust, which publicly expressed dissatisfaction with Tribune's dismal stock performance.

Shares of Tribune recently were up 62 cents to $32.15.