Knight Ridder, the second-largest newspaper company in the United States, agreed last night to sell itself for about $4.5 billion in cash and stock to the McClatchy Co., a publisher half its size, according to people involved in the negotiations.
The deal, which is expected to be announced today, comes as the newspaper industry is gripped by uncertainty as readers across the country have begun to drift away from printed newspapers.
However, the sale could help calm some investors who are nervous about the values of newspaper companies because Knight Ridder commanded a premium of about 25 percent for its shares from the time it put itself up for sale in November under pressure from shareholders.
McClatchy, which is based in Sacramento and publishes The Sacramento Bee and The Minneapolis Star Tribune, among others, was the only major newspaper company to submit a final bid for Knight Ridder, publisher of 32 daily newspapers, including the The Miami Herald, The Philadelphia Inquirer and The San Jose Mercury News.
Under the terms of the deal, McClatchy agreed to pay about $67 a share in cash and stock for Knight Ridder. About 60 percent of the payment will be in cash, while the rest will be in McClatchy shares.
McClatchy has one of the strongest records in the newspaper business, both for award-winning journalism in its generally small and medium circulation categories and financially. The industry has faced declining circulation and falling stock prices over the past several years, but McClatchy, through the end of 2004, boasted 20 consecutive years of circulation increases.