The offer, which was approved by the boards of both companies late on Sunday, is subject to shareholder and regulatory approval.
Gannett's chairman, John Curley, and Multimedia's chairman, Donald Sbarra, said the deal was good for shareholders of both companies.
The acquisition would reinforce Gannett's already strong position the US media market, giving it an additional five television stations in the midwest and the south and 11 daily and 49 non-daily newspapers across the country.
Gannett, already among the nation's largest media conglomerates, publishes 82 daily newspapers and operates 10 television stations and 11 radio stations. It is the largest outdoor advertising company in the US.
Analysts said the merged companies could prune costs by rationalising operations and laying off staff. The US newspaper market has seen several rounds of cost-cutting in the past year, in light of sharply higher newsprint costs and a secular trend of declining newspaper readership.
Gannett had sales last year of $3.8bn, although its flagship publication, USA Today, has yet to make a penny since its high-profile launch 14 years ago as the first truly national US newspaper.
Its recently launched European edition has performed well, however, and some analysts expect the title to earn its first sustained operating profit in the current fiscal year.
Multimedia earned $189m last year, on revenues of $630m, partly helped by its lucrative syndication arm, responsible for such popular American talk shows as Donahue (shown in the UK) and Rush Limbaugh, darling of the Right in the US.
Multimedia also operates a security alarm service with 76,000 subscribers and has cable franchises in five US states, covering 450,000 subscribers.
If the deal goes through, it will mark Gannett's first foray into the US cable market. Exposure to cable is seen as crucial to companies eager to offer products through the so-called "information superhighway".
Gannett has been on the lookout for acquisition targets in recent months, eager to develop both its newspaper and electronic media operations. One of the first companies to take advantage of satellite transmission to print at several sites around the country, the company is planning additional investments in multimedia, including information-on-demand via cable, using its large library of copyright material.