USA TODAY International Edition
Gannett threatens to pull revised offer after rejection
Shares of Tribune Publishing fell more than 15% Monday after the Los Angeles Times owner rejected the revised, $ 15- per- share acquisition offer from Gannett, driving the owner of USA TODAY to review whether to possibly withdraw its offer.
Tribune’s board determined that Gannett’s offer was “not in the best interests of Tribune shareholders but invited Gannett to agree to a mutual non- disclosure agreement under which both parties could engage in due diligence and discussions” for a deal, Tribune said.
Chicago- based Tribune also erected another hurdle for Gannett by issuing 4.7 million new shares, a 12.9% stake, and selling them for $ 70.5 million to Nant Capital, a firm founded by Los Angelesbased billionaire Patrick Soon- Shiong. The investment values Tribune at $ 15 per share, the same as Gannett’s offer, and assures Soon-Shiong would be in the corner of Tribune Chairman Michael Ferro as he continues to resist Gannett’s current offer.
Soon- Shiong, also a minority owner of the Los Angeles Lakers, was named Tribune’s vice chairman of the board, the latest board change Ferro has made in recent weeks. Ferro and Soon- Shiong now own about 30% of Tribune.
Gannett said it “will review whether to proceed with its acquisition offer” given the developments. “Tribune has continued to take actions that Gannett believes are designed to convey disproportionate control of the enterprise to select stockholders while ignoring its duties to all Tribune stockholders,” Gannett said. “Tribune again changed the composition of its board without stockholder participation.”
Shares of Tribune fell 15% and closed at $ 12.09.
A week ago, Gannett, which owns more than 100 local news properties, raised its bid from $ 12.25 per share, hoping to get an agreement from Tribune’s management, which has been unwilling to engage in serious talks since Gannett privately approached Tribune on April 12.
The revised offer values Tribune, whose holdings include the Chicago Tribune and nine other dailies, at about $ 479 million. Gannett offered to assume about $ 385 million of Tribune’s debt, valuing the total deal at about $ 864 million.