Gannett to Buy Digital Services Company ReachLocal

Gannett Co. agreed to buy digital marketing services company ReachLocal Inc. for about $156 million, the latest move by a traditional newspaper publisher to diversify beyond print media.

The deal is worth $4.60 a share, a hefty premium to ReachLocal's closing price of $1.66. ReachLocal shares, which resumed trading following a halt, surged to $4.57.

Gannett said the deal will expand its digital revenue by roughly 50%.

ReachLocal, based in Woodland Hills, Calif., has more than 16,000 customers in markets including home services, health care, automotive and professional services.

"ReachLocal's focus on local small and medium sized businesses aligns well with Gannett's local-to-national strategy and extends our reach into new local markets," Gannett said.

Gannett expects the deal to be approximately neutral to earnings per share in its first full year and add to earnings modestly in the second full year.

Gannett, whose holdings include USA Today, has been active on the deal front since the 2015 split of the company's print and television assets. The TV assets are now included in a separate company, Tegna Inc.

Gannett bought Journal Media Group's 15 daily newspapers for $280 million and in May, sweetened its unsolicited bid to buy Tribune Publishing Co.

Write to Josh Beckerman at [e-mail]

(END) Dow Jones Newswires

June 27, 2016 18:05 ET (22:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.