Gannett to forge ahead with hostile takeover bid for Tribune
Gannett Co. is forging ahead with its hostile takeover bid for Chicago-based Tribune Publishing Co. after a large number of shareholders refused to back Tribune's board nominees last week, indicating possible support for a merger.
The owner of USA Today is prepared to sign an agreement to share private business information to help negotiate an all-cash deal, according to a statement Tuesday. The McLean, Virginia also wants the right to send an offer directly to Tribune stockholders.
"Gannett believes that maintaining this flexibility is important in light of the continued opposition to Gannett's" bid from the Tribune's board, the company said.
Leading up to the annual shareholder meeting Thursday, Gannett was leaning toward withdrawing its offer to acquire the publisher of the Chicago Tribune and Los Angeles Times, Bloomberg News had reported, citing a person familiar with the matter.
Yet the vote gave Gannett new momentum. More than half of the shares not held by insiders withheld support for Chairman Michael Ferro, Chief Executive Officer Justin Dearborn and board member Eddy Hartenstein, according to a regulatory filing Monday. About 53 percent of the independent shares voting denied support for two other nominees, David Dibble and Philip Franklin.
Including Tribune insiders, about 39 percent of shareholders withheld support from the entire slate, exceeding Gannett's expectations of 25 percent to 35 percent. The large number withholding support underscores investor discontent, giving Gannett incentive to continue its pursuit for the publisher.
"Gannett continues to believe that the Tribune Board should engage constructively with Gannett toward negotiating a merger agreement that benefits both companies' stockholders," the company said. "Gannett also believes it is imperative for due diligence to occur soon given the apparent rapid series of changes taking place inside Tribune that may diminish the value of Tribune to Gannett."
Gannett has aggressively pursued Tribune's portfolio of newspapers, which had revenue of $1.67 billion last year. The company made two offers - one in April for $12.25 a share and a second in May for $15 a share. Gannett would also assume about $385 million in debt.
Tribune's board rejected both offers as too low and not in shareholders' best interests. Capital Structures Realty Advisors, a Tribune investor, is suing the media company's directors for failing to engage with Gannett on its proposal.
Gannett will keep its $15-a-share offer in place while evaluating "near-term developments," including Tribune's second-quarter 2016 results, according to the statement Tuesday. Tribune is expected to report earnings on Aug. 9.
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