Knight Ridder on Monday said it had retained Goldman Sachs to explore “strategic alternatives” for the company, including a possible sale, as the second-largest US newspaper chain scrambles to boost shareholder value.

The move reflected the pressure on the company to find a buyer or take other action to appease a group of frustrated investors agitating for change.

Knight Ridder on Monday cautioned that there were no assurances that the exploration would result in a deal.

Like other US newspapers, Knight Ridder has struggled amid rising newsprint costs, declining circulation and more competition for advertising from the internet.

Its travails came into focus two weeks ago when Private Capital Management, a US hedge fund that is Knight Ridder’s largest shareholder, sent a letter to the board complaining about its depressed share price and demanding they “aggressively” pursue a sale. Private Capital, which has a 19 per cent stake in Knight Ridder, also threatened to nominate its own slate of directors at the company’s annual meeting.

Within days Harris Associates and Southeastern Asset Management, two other large investors, added their voices to the campaign.

The company’s share price has risen more than 15 per cent during the past two weeks to $63.61 on Monday, after a prolonged slump. But analysts have questioned who would want to buy the company, which owns the Philadelphia Inquirer and Miami Herald and 30 other major daily papers, given the industry’s precarious future.

“The real question is, is there a willing buyer?“ said William Bird, a publishing analyst at Citigroup. Mr Bird doubted any private equity investors would be likely to pay more than $60 per share for the company, even after factoring in possible cost-cuts. Strategic buyers also appear to be in short supply.

Two newspaper companies with the financial resources to make a deal, McClatchey and Gannett, tend to focus on smaller markets with growth potential. Another possibility, Tribune, is still stinging from its acquisition of Times Mirror.

Knight Ridder declined to comment on Monday.

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