Tribune said it plans to sell the Cubs baseball team at the end of this season.
Analysts have estimated that the Cubs could fetch $600 million or more. Tribune bought the team in 1981 for $20.5 million. Tribune said the company's 25 percent interest in Comcast SportsNetChicago would be part of the sale package.
After spending six months soliciting bids and reviewing offers, Tribune had set a self-imposed March 31 deadline to announce a spin-off, buyout or reorganization.
In addition to the Zell bid, the Tribune considered a competing offer from Los Angeles billionaires Eli Broad and Ron Burkle.
Tribune said Zell plans to invest $315 million in the deal and will eventually become chairman of the Chicago-based company's board when the buyout is complete sometime in the fourth quarter.
The buyout will be conducted as a two-part deal, the company said. The first stage, expected to be completed in the second quarter, will involve a cash tender offer of $34 per share for 126 million shares, more than half of the outstanding Tribune shares. The remaining shares will be purchased later at the same $34 per share price.
Broad and Burkle had also offered $34-per-share, and the company's board reportedly spent much of the weekend sifting through the two offers.
Tribune has about 240 million shares outstanding, according to a regulatory filing.
"The strategic review process was rigorous and thorough," William Osborn, a Tribune director who led the review process, said in a statement. "We determined that this course of action provides the greatest certainty for achieving the highest value for all shareholders and is in the best interest of investors and employees."
Tribune said Zell will use an employee stock ownership plan to finance part of the deal and lower the taxes on any sale. The ESOP, which resembles a profit-sharing plan, will become the majority owner of Tribune once the deal is complete. Zell will be entitled to buy 40 percent of the company's common stock.
"I am delighted to be associated with Tribune Company, which I believe is a world-class publishing and broadcasting enterprise," Zell said in a statement. "As a long-term investor, I look forward to partnering with the management and employees as we build on the great heritage of Tribune Company."
An ESOP allows the company to borrow money and repay loans using pretax dollars. Payments of both interest and principle are tax-deductible and would create more leverage for a buyer.
"The ESOP can only help pay down this mountain of debt with a positive corporate culture that drives performance but does not deflate the motivation of workers," said Joseph Blasi, a professor at Rutgers University who is an expert on the structures.
Zell, 65, made his fortune reviving moribund real estate. After a bidding war culminated in February, he sold his company, Equity Office, to the private equity firm Blackstone Group for $23 billion.
If Tribune decides to accept another buyout offer before its shareholders approve the deal, the company will have to pay Zell a $25 million breakup fee.
Tribune shares rose 85 cents, or 2.7 percent, to $32.96 in morning trading on the New York Stock Exchange.