It also comes as the news industry continues to battle declining revenue, decreased circulation, changes in reader habits, and struggles to profit from digital operations.
"We know more than anybody how difficult this business is," Katz told employees Tuesday afternoon at the company's Market Street headquarters. "We're going to give it our best. We're going to try to bring in the best. And, hopefully, we'll have a wonderful result."
The pair said they would rename the company and own equal shares, though they hope to lure other investors.
Each is among the most prominent businessmen and philanthropists in the region. Katz, 72, grew up in Camden and made millions in banks, billboards, and parking lots. His son, Drew, 42, chief executive of a Cherry Hill-based billboard company, is expected to play a role in the new venture.
Lenfest, 83, made about $1 billion when he sold his cable company to Comcast in 1999 and has spent recent years giving away his fortune to philanthropic causes.
In their first move, the men announced that Lenfest would serve as interim publisher until a permanent one could be hired. He will replace publisher Robert J. Hall, who Lenfest said planned to retire.
Hall declined to comment as he left the auction.
"We feel very fortunate we were able to prevail in the auction," Lenfest said. "We want to return The Inquirer to the great newspaper it has been for many years."
He also endorsed the continued newsroom leadership of Inquirer editor William K. Marimow, who was fired in October by Hall with the support of Norcross.
Marimow's ouster brought into public view a long-simmering feud between Katz and Norcross, who formed the two-person management committee that together approved all major business decisions at IGM.
Marimow was later reinstated by a judge, but both sides conceded that their disagreements had pushed the company toward paralysis, and they moved for a court dissolution.
Before Tuesday's auction, Norcross' group - with owners Joseph Buckelew and William Hankowsky - held 57.45 percent of IGM's shares, while Katz and Lenfest had 42.55 percent. The auction was to decide which group would buy out the other.
Using the court-ordered auction formula, the Norcross group is scheduled to be paid $41.7 million within 15 days.
Norcross' personal profit is unclear. The 58-year-old businessman and South Jersey Democratic Party leader bought out another IGM partner, Krishna Singh, for an undisclosed price last year.
If Singh simply recouped his initial investment, Norcross may have netted about $6 million at Tuesday's auction, according to figures and a sale formula outlined in court filings.
Norcross' attorney, Robert Heim, described the profit only as a "reasonable return."
Norcross declined to comment as he left the auction.
"We are happy for the company's employees, readers, and advertisers that this issue is now resolved," the Norcross group said in a statement. "It is time to return the company's focus to journalism and away from conflict among its owners."
Alan D. Mutter, a former newspaper executive and now managing director of Tapit Partners, a Silicon Valley consulting firm, said the price appeared "generous" for a newspaper company, especially one that might not be profitable.
"It suggests a commitment to sustaining the quality of the newspapers [that] surpasses the dollars and cents," Mutter said. "However, if the losses get bigger, they might have to reconsider how much they want to underwrite the journalism of the two newspapers and the websites."
Katz said both sides won.
"One party got a wonderful return on his investment," he said, "and the other party has the privilege to give the newspaper . . . all it deserves."
Scattered applause broke out as the auction result reached The Inquirer newsroom just before 11 a.m.
Nancy Phillips, Katz's longtime companion and The Inquirer's city editor, teared up as she accepted hugs from colleagues. Editors and reporters also greeted Marimow with congratulations and handshakes.
Huddling with a few staffers who, like him, had previously been targeted by Hall for possible firing, Marimow expressed relief that the owners' battle had ended.
"I'm really pleased that Gerry Lenfest and Lewis Katz prevailed," he said in an interview later. "I believe they are committed to the kind of public-service journalism that Philadelphia, its suburbs, and South Jersey really require."
While Tuesday's ownership change elicited elation in some corners, it left others with questions. Bill Ross, executive director of the Newspaper Guild, the union that represents nearly 500 employees at the company, said he wondered how Katz and Lenfest would recoup the cost of their $88 million bid.
"We look forward to moving forward, rebuilding the company, and making it very clear to the new owners that they better not come looking for concessions from our union," he said. "We've done enough to help them, and we will continue to help, but we're done giving."
Katz and Lenfest said they took on no new debt to finance their offer, a factor that led the newspapers in 2009 into bankruptcy and to their eventual sale to hedge funds.
The decision, in 2012, by a group of six Philadelphia and South Jersey investors led by Katz and Norcross to buy the papers was lauded as a development that would return The Inquirer and the Daily News to local control. But within a year, that partnership soured.
Under rules established by a Delaware judge, the bidding Tuesday morning at the Dechert law firm was to rise by $1 million every 10 minutes until one side dropped out. Both sides of the bidding war declined to describe the auction itself, citing a gag order from the judge.
In his meeting with employees, Katz said its outcome surprised even him.
"I did not expect this result," he said. "I would have bet anything that I would be cashing the big check today."
Lenfest said Tuesday that he expected others to join the new ownership group, though he did not name any potential investors. The company's affairs will now be run by a board of directors, he said, and will not have the mutual-veto arrangement that led to the impasse between Katz and Norcross in the first place.
Katz and Norcross had accused each other of meddling in newsroom matters. The new owners told employees Tuesday they did not intend to be involved in newsroom management.
Lenfest said there were no plans to close the Daily News, whose future has remained uncertain amid repeated ownership change. Asked whether they would seek new leadership for philly.com, currently led by Norcross' daughter, Alessandra, Lenfest again demurred, saying that decision was best left for the future.
The only substantial shift Katz and Lenfest appeared prepared to discuss Tuesday was the search for a permanent publisher and CEO. Lenfest told employees that they had already identified five potential candidates and expected the process to take several months.
Inquirer executive editor Stan Wischnowski, who led the newsroom during Marimow's absence, said one of the company's highest priorities must be unifying its three newsrooms behind a single digital strategy.
"High-quality journalism is still what drives us," Wischnowski said, "so if we want to broaden our reach, then our content has to be relentlessly timely, interesting, and important on all platforms."
H.F. "Gerry" Lenfest will become interim publisher while a search is conducted for a permanent replacement.
Other investors are expected to join the new company, which will be run by a board of directors.
Inquirer staff writer Angelo Fichera contributed to this article.