Under the agreement announced Thursday, Gannett will pay $13.75 per share for the Dallas-based TV station operator, which owns KING-TV and KONG-TV in Seattle. That represents a 28 percent premium over Belo's closing price on Wednesday.
Gannett, the largest U.S. newspaper publisher by circulation, also will assume $715 million in debt. Gannett owns USA Today and other newspapers as well as television stations.
Shares of both companies soared to their highest prices since 2008. In morning trading, Belo Corp.'s shares jumped $2.92, or 27 percent, to $13.65, after peaking at $13.69 shortly after the market opened. Gannett Co.'s stock rose $4.88, or 25 percent, to $24.73 after peaking at $25.69.
Gannett President and CEO Gracia Martore called the acquisition an "important step" in Gannett's diversification and said it will significantly improve the company's cash flow and financial strength.
The acquisition will make Gannett, based in McLean, Va., one of the country's largest owners of major network affiliates, reaching nearly one-third of U.S. households. It nearly doubles Gannett's portfolio from 23 to 43 stations and gives it 21 stations in the country's top 25 television markets.
In addition to KING and KONG, Belo owns NorthWest Cable News and stations in Portland, Spokane and Boise.
Gannett expects the deal to boost its adjusted earnings by 50 cents per share within the first 12 months and generate $175 million in annual cost savings within three years after closing.
Belo President and CEO Dunia Shive said the sale is an "outstanding and financially compelling transaction" for his company's shareholders.
The deal, which has been approved by the boards of both companies, is expected to close by the end of 2013. It needs approval from the Federal Communications Commission and at least two-thirds of Belo shareholders.
Belo executives and shareholders representing about 42 percent of the company's voting power have agreed to support the sale, the companies said.
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