Gannett rejects Digital First Media’s buyout offer
Publisher’s board calls into question the credibility of the unsolicited proposal
Gannett Co. said Monday that its board of directors had unanimously rejected Digital First Media’s offer to buy the USA Today publisher for $1.4 billion.
Digital First, a hedge-fund-backed media company officially known as MNG Enterprises Inc., made a bid to buy the publisher for $12 a share in cash last month.
Shares of Gannett fell 3.5% in Monday trading. Its stock has risen roughly 9.8% since the proposed offer was announced.
Gannett’s board called into question the credibility of the unsolicited proposal and believes the bid undervalues the company and isn’t in the best interests of Gannett or its shareholders, the company said in a statement.
In a response, Digital First said that Gannett has lost a sig- nificant amount of its value, its leadership doesn’t have a credible plan to restore that value and it is trying to block a premium deal. It added that it had no impediments to completing the transaction. Gannett’s stock was down 26% in 2018.
Gannett said that Digital First had never sought to meaningfully engage the company about the acquisition prior to an ini- tial report by The Wall Street Journal of its offer or its letter and public announcement the following day.
Digital First said Gannett had rejected the offer before meeting to discuss the terms.
The company also said Digital First didn’t provide any information on how it would finance the deal or address any potential regulatory setbacks. Gannett also said it offered to meet with Digital First’s representatives, but was told that it would need to sign a nondisclosure agreement before talks could proceed.
It also offered to review written responses from Digital First regarding financing and other details, information which it hasn’t yet provided, Gannett said.
Last week, The Wall Street Journal reported that Digital First had retained investment bank Moelis & Co. for advice on the bid and how to fund it, according to people familiar with the matter.
Digital First owns about 7.5% of Gannett. Digital First has indicated it could launch a proxy fight for control of Gannett’s board, which it would have to do before a nomination deadline on Thursday. In its response, Digital First reiterated it is considering that option.
In addition to reservations about Digital First’s ability to get funding for a potential deal, there has also been some concerns about Digital First, which is backed by New York hedge fund Alden Global Capital LLC and together have a record of making deep cost cuts at titles they acquire.
Gannett-owned publications have already been hit hard by layoffs, including dozens in January.