Tribune Publishing rejects Gannett’s purchase offer
CHICAGO — Tribune Publishing’s board has voted unanimously to reject Gannett’s $815 million unsolicited offer to buy the Chicago-based owner of the South Florida Sun Sentinel, Chicago Tribune, Los Angeles Times and other newspapers.
In a letter to Gannett on Wednesday, Tribune Publishing said after “thorough consideration” the offer was determined to be too low and not in the best interest of shareholders.
“The board and I remain confident in our ability to generate shareholder value in excess of Gannett’s opportunistic proposal through a focused execution of our strategy,” Tribune Publishing CEO Justin Dearborn said during an earnings call Wednesday afternoon. “The board has evaluated the unsolicited offer in this context and concluded it is not a basis for further discussion.”
Tribune announced it was spurning Gannett shortly after releasing its first-quarter earnings but before a call with investors in which executives detailed plans to separate the company into three segments — the traditional publishing business, a digital contentbusinessandthe Los Angeles Times.
Selling to Gannett not in those plans.
On April 12, Gannett, publisher of USA Today and more than 100 other newspapers, made an offer to buy Tribune Publishing for $12.25 per share, an all-cash deal valued at $815 million, including the assumption of$390million in debt. The offer represented a 63 percent premium over the stock price before itwas went public April 25.
Since then, Gannett has been ramping up the pressure on Tribune Publishing to “substantively engage” in discussions. Gannett said Tribune Publishingwas deliberately dragging its feet, while Tribune Publishing chairman Michael Ferro accused Gannett of “trying to steal the company.”
“This announcement reaffirms our concern from the outset that Tribune’s board never intended to engage with us, necessitating that we make our proposal public,” Gannett chairman JohnJeffry Louis said in a Wednesday news release. “It is unfortunate that Tribune’s boardwould deny their shareholders this compelling, immediate was and certain cash value by rejecting our offer without making a counterproposal or otherwise negotiating or providing any constructive feedback.”
Louis said Gannett will continue a campaign to get Tribune Publishing shareholders to withhold support for board directors.
Tribune reported a firstquarter net loss of almost $6.5 million, or 22 cents a share, compared with net earnings of $2.5 million, or 10 cents a share, in the year-ago period. Items affecting the quarter included a pretax $8 million charge related to an employee buyout programand $14 million in restructuring and transaction costs.
Among the initiatives is the creation of seven international news bureaus in Hong Kong, Seoul, South Korea, Moscow and other “entertainment” markets.
Dearborn also talked of an artificial intelligence system to build audience profiles, feed suggested content and keep viewers onTribune Publishing sites longer.
He said the system is expected to roll out this year and could generate “hundreds of millions of dollars” in incremental advertising revenue.