Nonetheless, in 2007 Blackstone Group bought Zell’s company, then known as Equity Office Property Trust, for $39 billion. His own fortune, estimated at nearly $5 billion, holds shares in residential real estate, drug and department stores, energy and electronics companies, and his lifetime acquisitions have made him one of the richest men in the United States. I was alone. He could have retired comfortably in middle age. -Sixties.
But seeing an even more inefficient market, he ventured into the unfamiliar world of newspapers and won a bidding war for the 160-year-old Tribune Empire, one of the nation’s premier media companies. In addition to Chicago and Los Angeles newspapers, it included the Baltimore Sun, Newsday, Hartford Courant, 23 television and radio stations, the Chicago Cubs, and Wrigley Field.
Transactions involve debt
Like many newspapers, the Tribune estate was draining advertising revenue and readers to the Internet. The company had been auctioned off for months, but Zell insisted his interest was purely economic, not editorial, to take the company private under an employee stock ownership plan. offered $34 per share in a complex deal.
He took control in an $8.2 billion deal in December 2007, which required just $315 million in funding, leaving employee owners to the existing Tribune Corporation. owed more than $13 billion, including a $5 billion debt to In this highly leveraged acquisition, the debt was to be paid almost entirely by cash generated by the company’s continuing operations.
The new corporation was exempt from federal income taxes and its debt was reduced by the sale of Newsday, the Cubs and Wrigley Field. But the employees who had no say in the deal took on an overwhelming burden and stood to benefit only if the company survived, while Mr. Zell made a relatively small investment to become chairman and the company. secured an option to acquire 40% of $500 million if successful.
