The drama for control of the Tribune Company intensified last night as two Los Angeles billionaires put in a last-minute bid, topping an offer from the Chicago real estate magnate, Sam Zell, by a dollar a share.
The two billionaires, Ronald W. Burkle and Eli Broad, sent a letter last night to Tribune management prior to the company’s self-imposed deadline of Saturday, according to a person with knowledge of the proposal.
The two investors said that like Mr. Zell, they would structure a deal based on an employee stock ownership plan, but would offer $34 a share, one dollar more than Mr. Zell’s bid. They also said they would put in $500 million of their own money, compared with Mr. Zell, who had planned to put in at least $300 million.
A Tribune spokesman had no comment last night.
The late bid almost certainly complicates the Tribune’s deliberations as it seeks a way to increase shareholder value. It throws into doubt any previous timetable for a decision about the company.
Both offers are based on a relatively unusual device of employee stock ownership plans, which have been successful for many small companies but have had mixed results for bigger companies.
Such plans, specialists say, have been virtually untested in the last two decades on companies the size of Tribune, which has about 20,000 employees.
The Burkle-Broad proposal would give the two investors 40 percent of the company, transferring 60 percent to the employees, according to someone with knowledge of the proposal. The ownership ratio involved in Mr. Zell’s proposal is sketchy, although his plans would also make the employees the majority owners.
Tribune, whose assets include The Los Angeles Times, The Chicago Tribune, 23 television stations and the Chicago Cubs, was forced to put itself on the block almost six months ago at the behest of its biggest shareholders, the Chandler family, who were unhappy with the management and the sagging share price.
Mr. Zell’s proposal would buy out the Chandlers; it is not clear how the Burkle-Broad plan would deal with the family, but in offering more money, the Burkle-Broad plan could probably accomplish the same thing.
Mr. Zell has said that he would keep the company intact, although his long-term plans have not been made public.
Mr. Broad, a real estate developer and civic leader, and Mr. Burkle, a grocery magnate who now runs Yucaipa, an investment firm for private and public retirement funds, had initially and separately expressed interest in acquiring only The Los Angeles Times, and their long-term objectives for the whole company are not known.
Tribune said in September that it would explore its strategic alternatives and come up with a plan by the end of the year. But the response to its auction was lackluster and it extended its deadline to the end of the first quarter, which is Saturday.
Mr. Burkle and Mr. Broad put in an earlier bid for what amounted to about $27 a share. But that too was perceived as inadequate.
Mr. Zell came late to the game and the company vacillated on his initial offer, prompting him to increase it. People with knowledge of the situation said the company had most recently been leaning toward his proposal, which would take the company private, but it was concerned that he would be taking on too much debt.
Still on the table is a plan by the company to restructure itself, partly by spinning off its television stations.
One hurdle for any new owner would be to overcome government rules that do not allow owners of newspapers to own broadcast outlets in the same market. Tribune has been doing so under a special waiver.
The idea of using an employee stock ownership plan was not original with Mr. Zell. In fact, Mr. Burkle himself had backed just such an idea last year in an attempt to acquire other newspapers. But, oddly, that option was not part of his and Mr. Broad’s earlier bid for Tribune. Once Mr. Zell put forth the notion of an employee ownership plan, and it seemed to be winning favor with Tribune, Mr. Burkle and Mr. Broad recast their bid to base it on such a plan.
