McClatchy meets with Knight Ridder about possible sale

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SAN JOSE, Calif. - Knight Ridder concluded two days of meetings with the McClatchy newspaper group Friday, the first of several potential buyers it will make presentations to this month.

The Sacramento, Calif.-based chain is one of several reported bidders for Knight Ridder, which owns 32 daily newspapers. Because McClatchy is about half Knight Ridder's size, analysts say it probably cannot buy the company without a private equity partner to help finance a deal.

The presentations are being held in San Jose and will resume next week for another bidder.

Once presentations have been made to all potential buyers, final bids will be submitted. Prospective buyers are under no obligation to make a final bid for the company. If Knight Ridder doesn't like the offers, it could decide not to sell. But sources in the merger and acquisition business say once an auction goes this far, the momentum generally results in a sale.

Knight Ridder spokesman Polk Laffoon declined to comment, and all parties in attendance were tight-lipped about the meeting. Investment banks Goldman Sachs and Morgan Stanley are advising Knight Ridder.

Other media groups said to be interested in the $4.2 billion company are Gannett, the nation's largest U.S. newspaper chain, and the MediaNews Group of Denver.

Three teams of private equity companies are also reported to have made initial bids. They are The Blackstone Group, Providence Equity Partners and Kohlberg Kravis Roberts & Co; Texas Pacific Group, Thomas H. Lee Partners, Hellman & Friedman and Bain Capital; and Madison Dearborn Partners and Vestar Partners.

Knight Ridder is considering a sale of the company under pressure from its largest shareholders, who are unhappy with the company's stock performance. Private Capital Management, a Naples, Fla., investment firm that owns 19 percent of Knight Ridder's stock, wrote a letter to the company's board Nov. 1 urging it to seek competitive bids for the company.

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