Frustrated investors forced Knight Ridder to listen to offers

The merged group will own 32 daily papers and 50 other titles.

To help finance the deal McClatchy will sell 12 less profitable Knight Ridder papers, including the San Jose Mercury News and the Philadelphia Inquirer.

Falling circulations and the loss of advertisers to the internet have hit US newspaper publishers in recent years.

Investor power

Frustrated with its share performance, leading Knight Ridder shareholders had forced the company to put itself up for sale late last year.

Although it is a smaller publisher, with revenues of $1.2bn last year compared with Knight Ridder's $3bn, McClatchy is known as one of the best performing US newspaper publishers, with a strong balance sheet and a history of growing circulations.

The deal is expected to complete within three to four months, and will give McClatchy a combined daily circulation of about 3.2 million people.