SAN JOSE, Calif. -- Knight Ridder shareholders voted yesterday to sell the company to Sacramento-based McClatchy, ending the 32-year run of one of America's premier newspaper companies.
The votes were tallied at the company's annual meeting at San Jose's Fairmont Hotel, a few steps from the company's soon-to-be vacated headquarters. Eighty percent of shareholders needed to approve the deal, and the company said the vote was overwhelmingly in favor: Out of 54,421,642 shares, only 804,900 voted against it and 531,499 abstained.
"Our heritage, our values, our collaborative culture, our talented people, our distinguished newspapers, our online innovation and our place in our community have added up to something unique," said Knight Ridder Chairman and Chief Executive Officer Tony Ridder, who became emotional toward the end his speech. "Tomorrow, as new owners assume the mantle for what we have built, we should take pride in the strength of that legacy."
The value of the deal, originally $4.5 billion in cash and stock, has fallen about 9 percent - roughly $400 million - since it was announced on March 13, after a sharp drop in McClatchy's stock, which was at another 52-week low yesterday.
McClatchy and Knight Ridder executives hope to sign off on final merger documents by 4 p.m. today.
At that point, Knight Ridder, which was formed in 1974 by the merger of Knight Newspapers and Ridder Publications and grew into the second-largest newspaper chain in America, will cease to exist. The company won numerous journalism awards, including 85 Pulitzer Prizes, and was a pioneer in the difficult transition from print to the Internet.
In the end, however, Knight Ridder was unable to satisfy its shareholders - the vast majority of them institutional investors whose primary obligation was to their own clients, rather than to journalism.
The dismantling of Knight Ridder will result in McClatchy absorbing 20 of Knight Ridder's 32 newspapers; McClatchy is selling the other 12.
In related news, McClatchy said yesterday that it has agreed to sell the Times Leader of Wilkes-Barre, Pa., to a consortium of private investors. The Times Leader was the last of the Knight Ridder papers McClatchy planned to shed.
Richard L. Connor, who was editor and publisher of the Times Leader during a crippling newspaper strike almost three decades ago, plans to buy the newspaper in conjunction with a group of local investors and HM Capital Partners LLC, a Dallas investment fund. Terms were not disclosed at the request of the buyers, McClatchy said.
The sale of Knight Ridder is a major blow to Ridder, who moved Knight Ridder's headquarters from Miami to downtown San Jose to be at the center of the Internet revolution, only to see the company sold eight years later.
Ridder, who earlier in his career was the San Jose Mercury News publisher for nine years, said he and the rest of his family was upset by the forced sale.
The sale was forced by Bruce Sherman, a Naples, Fla., investor and chief of Private Capital Management, the San Jose news group's largest investor. Sherman gathered other unhappy shareholders last year to make an assault on the company, which like other news groups, had seen share values fall sharply because of doubts about the future of print media.
The ensuing turmoil not only resulted in the end of Knight Ridder, but has also put pressure on the entire newspaper industry to improve results. Shareholders have pressed everyone from the New York Times Co. to the Chicago-based Tribune Co., owner of The Sun, to improve share prices by selling off parts of companies or taking other measures.