Tribune Publishing rejects Gannett's $815 million takeover bid

Tribune Publishing Co.'s board unanimously rejected a $815 million unsolicited takeover offer from Gannet Co., saying the bid undervalues the owner of the Los Angeles Times and the Chicago Tribune.

"After thorough consideration, the board has unanimously concluded that it is not prepared to engage with Gannett about a combination of our companies based on the value you indicated in the proposal," Tribune's board wrote in a letter Wednesday. "The board believes that the price reflected in the proposal understates the company's true value and is not in the best interests of our shareholders."

The newspaper publisher is in the early stages of a strategic plan that includes creating digital subscription services and expanding the LA Times brand globally, which will include opening seven international bureaus this year, Chief Executive Officer Justin Dearborn said on an earnings call Wednesday following the announcement.

Tribune also plans to break out the Times' revenue and profit as a separate segment from the rest of the company, which could boost the sale price and put pressure on Gannett to raise its offer.

The move is the strongest sign yet that top shareholder Michael Ferro is unwilling to make a deal with Gannett three months after he became chairman. The entrepreneur said Gannett was "trying to steal the company" by pushing for acceptance of its offer before the board could review his strategy for the company and before a June 2 shareholder meeting, Los Angeles Times columnist Michael Hiltzik reported last week.

Gannett offered $12.25 in cash for each Tribune share, a 63 percent premium to Tribune's closing price on April 22. The owner of USA Today publicly announced the proposal two weeks after unsuccessfully making a private offer.

"The board is confident in our ability to generate shareholder value in excess of Gannett's opportunistic proposal through our focused execution of this stand-alone plan," according to the letter.

Acquiring Tribune would give Gannett a 17 percent share of total U.S. daily newspaper circulation of about 41 million, according to Bloomberg Intelligence. Currently, Gannett has about a 12 percent share, while Tribune has 5 percent with papers that also include the Chicago Tribune and Baltimore Sun.

Tribune rose 4.4 percent to $11.50 in trading after the market closed. It has gained 20 percent this year while Gannett is little changed.

Spokesmen for Gannett didn't immediately respond to a request for comment.