The transaction creates the nation's third-largest newspaper company and marks the end of Times Mirror.

The Chandler family, which has controlled the Times for 118 years and owns a majority of Times Mirror voting shares, initiated the negotiations and supports the deal, the paper said.

Both papers announced the deal with front-page headlines today.

"Tribune Co. is the single best strategic partner for Times Mirror," said Warren B. Williamson, chairman of the Chandler Trust, which represents the family's interest in the company.

The new company would boast a daily newspaper circulation of 3.6 million, by the Tribune's count. That would make it the nation's third-largest newspaper company, trailing Gannett Co. Inc. and Knight Ridder.

The company would have 11 daily newspapers, 22 television stations, magazines such as Popular Science, and four radio stations. Internet sites operated by the company are expected to earn $55 million in 2000.

"Our company will be the best positioned local market media company for the future," John W. Madigan, chairman, president and chief executive of the Tribune Co., said. "National scale and local depth across media will drive our top line growth."

News of the merger agreement, which values Times Mirror shares at twice their recent price, sent Times Mirror stock soaring $35.87, or 75 percent, to $83.81 in early afternoon trading on the New York Stock Exchange. Tribune shares were off 20 percent, or $7.43, at $29.75, also on the NYSE.

Under the takeover, Times Mirror shareholders will have a choice of taking $95 per share in cash from Tribune Co. or exchanging each of their Times Mirror shares for 2.5 shares of Tribune Co. stock. The Tribune Co. also will assume about $1.4 billion in debt, the Times reported.

The deal, approved by Times Mirror directors late Sunday night, still must be approved by shareholders.

Federal Communications Commission approval is not required, even though Tribune Co. would gain Times Mirror newspapers in cities where it already operates television stations, the companies said in a joint news release.

Under FCC policy, merging media companies can own a newspaper and television station in the same city until the next license renewal date. Tribune-owned stations in Los Angeles and Hartford, Conn. — the home of Times Mirror's The Hartford Courant, are not up for renewal until 2006. Tribune Co.'s station in New York, where Times Mirror operates Newsday, is up for renewal in 2007.

"If the cross-ownership rule has not been modified by that time, a waiver would be needed," the companies said.

Because the deal did not involve competitive bidding for Times Mirror, it includes a provision under which other bidders have 20 calendar days to top the Tribune Co.'s offer, the Times said in Monday editions.

Tribune Co. would control operations from its Chicago headquarters and Madigan would head the new company.

Times reporters today said they were surprised by the merger and uncertain about the impact.

"We haven't lost a newspaper," said a Los Angeles Times employee as he rushed into the newspaper's downtown office this morning, too hurried to give his name. "We've gained a baseball team."

"It's a very unsettled feeling," said Carlos Selva, a reporter with the Los Angeles Times-Washington Post news service. "As for me, I won't know until I get more details."

Employees will be offered severance packages "in the event positions are eliminated in the first year of Tribune's ownership," Times Publisher Kathryn M. Downing said in a written message given to employees arriving for work.

The proposed sale follows five years of dramatic changes at Times Mirror under the stewardship of its chief executive, Mark H. Willes. After arriving in spring 1995, he closed The Baltimore Evening Sun and New York Newsday and sold off assets that substantially trimmed the company.

Wall Street rewarded those moves. The company's stock went from $23.25 in June 1995 to a high of $72.62 in November 1999. Willes pledged even more growth, particularly in the highly competitive Los Angeles market.

But over the past 18 months, circulation growth was disappointing and profits lower than expected. By Friday, the stock had fallen to $47.94, a 52-week low.

In December, the Los Angeles Times was embarrassed by the disclosure of a revenue-sharing deal with the Staples Center sports arena. Under the arrangement, the two would share advertising profits from an issue of the newspaper's Sunday magazine devoted to the arena opening.

The brunt of criticism for the deal fell on Willes' protege, Downing, and Editor Michael Parks. Many saw it as the result of Willes' campaign to break down walls between business and news departments as a way to build the newspaper.

Willes said he will leave after the deal is completed. Downing said she does not intend to resign.

The departure of Willes and the Tribune Co.'s new leadership could help Times employees move beyond the bitterness many still feel toward management over the Staples Center controversy, Jay Christensen, an editor in the sports department, said today. "Hopefully this will put a close to that whole chapter," he said.

Willes said he was "totally surprised" when he first learned of the negotiations less than two weeks ago, since he believed the Chandler family trust prevented the paper from being sold or merged, he said.

Negotiators worked around that by giving the family four seats on an expanded 16-member board and 40 percent of the seats on the Los Angeles Times board. The Chandlers also retain certain special rights including a say in the selection of the Times publisher.

Besides the Los Angeles Times, The (Baltimore) Sun and the Courant, Times Mirror publishes Newsday of Long Island, N.Y.; The Morning Call of Allentown, Pa.; and The (Stamford) Advocate and Greenwich Time, both of Connecticut.

More than 60 million people read Times Mirror magazines, including Field & Stream, Popular Science, GOLF Magazine, Outdoor Life, SKI Magazine and SKATEboarding.

The Tribune company reported 1999 revenues of $3.2 billion and has about 13,400 employees. Tribune Broadcasting owns and operates 22 major market television stations and says it reaches more than 75 percent of U.S. television households.

The company also owns and operates four radio stations, including three stations in Denver and WGN-AM in Chicago. Tribune Entertainment, a subsidiary, develops and distributes TV programming. In addition, the company owns the Chicago Cubs baseball team.