McClatchy is selling three KRI papers in California and one in St. Paul for a total of $1 billion, or 11.5 times the operating earnings achieved by the papers in 2005, according to the company’s press release.
Because McClatchy is buying the papers from Knight Ridder for 9.5x operating earnings, MNI is in line for a pre-tax profit of approximately $175 million. That’s a 21% gain since agreeing to buy Knight Ridder six weeks ago.
In the period since McClatchy cut the KRI deal, its stock has dropped 16% to close Wednesday at $44.71 per share. The $1 billion transaction was announced after the close of trading.
When the market opens Thursday, will 21% prove to be McClatchy's lucky number?
Disclosure: I own shares of both McClatchy and Knight Ridder.