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Two Seek Large Stake in Tribune

As the deadline for bids for the Tribune Company came and went yesterday, the team of Eli Broad and Ronald W. Burkle made an audacious $500 million offer to help refinance the company while becoming its largest shareholder.

Meanwhile, the Chandler family — which once owned The Los Angeles Times, the company’s biggest newspaper — was looking to mount an offer of its own.

Tribune offered no comments on either possible offer, but the company is planning a board meeting this weekend to review the bidding and to try to figure out what to do next. If neither bid satisfies the Tribune board, the company may decide not to sell itself at all, putting it back where it was last spring, when the Chandler family complained about the low stock price, setting the auction in motion.

The Broad and Burkle offer is essentially a recapitalization of the company. It would give a $27 dividend payment for each share, according to people involved in their bid. In exchange, they would receive 31 percent of the company, leaving the remaining 69 percent to the current shareholders.

The deal, financed by a $500 million cash infusion from Mr. Burkle and Mr. Broad and $11 billion in debt, effectively values the company at $34 a share. Tribune stock was down 18 cents yesterday, to close at $30.34.

Mr. Burkle and Mr. Broad, both well-known financial and social figures in Los Angeles, have expressed an interest in owning The Los Angeles Times. It’s not clear what they would do with the Tribune company if their deal was accepted or what assets they might spin off or sell.

Nor is it clear what would induce the Tribune company to accept the offer from Mr. Burkle and Mr. Broad, which essentially buys 31 percent of the company for $500 million. Tribune, however, could take on $11 billion of debt on its own if it wanted to offer a similar dividend.

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Eli Broad, above, with Ronald W. Burkle, has bid for Tribune.Credit...Reed Saxon/Associated Press

Several private equity firms expressed interest in Tribune in the period leading up to yesterday’s deadline but none placed a bid, according to people involved in the process. Perhaps because the auction seemed to be generating so few offers, the Chandlers, the company’s biggest shareholders, began to consider its own proposal for the Tribune and may be looking for a private equity firm to join in, according to other people close to the process.

While the Chandlers have indicated that they were not eager to take over the company, they might do so to create value in what they see as underperforming assets or to prod other potential suitors into bidding.

The company put itself on the block last fall, announcing that it wanted to sell the whole company. But when little interest materialized, it said it would consider selling its assets individually. The company owns The Baltimore Sun, The Hartford Courant, The Chicago Tribune, two dozen television stations and the Chicago Cubs.

But selling the assets piecemeal could mean hefty tax bills for the company, and for this round, it was back to considering bids for the whole company only. Wealthy individuals in Los Angeles, including David Geffen, have said they want to buy The Times, and others have expressed interest in some of the company’s other newspapers.

“This auction has been an ill-fated process,” said Edward Atorino, a media analyst with the Benchmark Company, a financial research company. “It started off on the wrong foot and never got righted.”

The Chandler family, which owns 20 percent of the company, has sent ambivalent signals about its interest in regaining title to the newspapers, which it sold to Tribune in 2000. And yet people familiar with the bidding have suggested that the Chandlers could put together a deal that would help them buy the company as a whole and that they then might sell off the television stations.

One newspaper executive said that the apparent lack of interest in Tribune as a whole was not necessarily a bad omen for newspapers.

“It doesn’t mean that everyone has soured on the business or that no one wants pieces of the company,” this executive said. “It only means that no one wants a diversified collection of communication assets worth $13 billion.”

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