Gannett board reelected by shareholders
Gannett shareholders have voted to reject MNG Enterprises’ board nominees, siding with the USA TODAY owner as it attempts to fend off a hostile takeover bid by the hedge fund-controlled newspaper company.
Gannett Chairman J. Jeffry Louis announced Thursday that the company’s shareholders backed the eight board members who stood for reelection, according to preliminary results of the vote. The three nominees proposed by Alden Global Capital’s MNG Enterprises failed to gain seats on the board.
The preliminary results were revealed during Gannett’s annual meeting at the company’s headquarters in McLean, Virginia. Official certified results will be filed within days. Vote totals were not immediately available. Onlookers applauded when the results were announced.
“This outcome demonstrates that Gannett shareholders recognize the continued progress we have made toward our ongoing digital transformation and agree that our strategic plan is the best path to deliver value for all Gannett shareholders,” interim Chief Operating Officer Barbara Wall wrote in an email to employees Thursday. “Our shareholders also understand that the broad and diverse backgrounds, professional experiences and skills of our directors make them uniquely qualified to oversee Gannett’s achievement of its strategic objectives and transformation plan.”
Bernard Lunzer, president of the NewsGuild union, praised Gannett for taking a stand against the MNG nominees.
“I applaud Gannett for still believing in sustainable journalism,” Lunzer said. “It is a hard task right now. We believe there is a strong future.”
MNG in January made an unsolicited offer to acquire Gannett for $12 per share. Gannett rejected the bid as not credible and argued that MNG’s nominees had potential conflicts of interest.
While MNG could still pursue an ac
quisition, its failure to secure seats on Gannett’s board reflects a significant setback in its efforts. With seats on the board, MNG could have agitated for a potential deal.
MNG gave no indication whether it would continue its campaign to acquire Gannett.
“This is a win for an entrenched Gannett Board that has been unwilling to address the current realities of the newspaper business, and sadly a loss for Gannett and its shareholders,” MNG said in a statement. “Gannett’s newspapers are critical local resources, and we hope that Gannett’s incumbent Board and Management shift course to embrace a modern approach to local news that will save newspapers and serve communities. That would be the best outcome. If Gannett’s Board does not shift course from overpaying for non-core, aspirational and dilutive digital deals, we believe the stock will drop further.”
Huber Research Partners analyst Douglas Arthur said MNG’s bid seems “kaput at this point,” given the company’s remarks after the meeting.
“Looks like the white flag is up for the moment,” Arthur said in an email.
Stockholder advisory firms Institutional Shareholder Services and Glass Lewis had called into question MNG’s ability to finance the bid but said that $12 per share would be a reasonable starting point for talks.
Gannett board members winning reelection were Chairman John Jeffry Louis, John E. Cody, Stephen Coll, Donald Felsinger, Lila Ibrahim, Lawrence S. Kramer, Debra A. Sandler and Chloe R. Sladden.
MNG, otherwise known as Digital First Media, had nominated three members: former MNG CEO Steven Rossi, Cogent Group Principal Dana Goldsmith Needleman and Alden President and MNG Vice Chairman Heath Freeman.
ISS backed Rossi but did not endorse the other two. Glass Lewis did not endorse any of MNG’s nominees.
MNG had previously nominated six people to the board but withdrew three amid mounting scrutiny of Alden’s track record of cuts and investment miscues.
Gannett has argued that it has an achievable plan for digital transformation while closely managing costs. MNG has argued that Gannett should stop investing in digital enterprises and needs to “right size overhead costs.”
Louis said the company is “laser focused on transformation” and is successfully transitioning to a business model that “positions the company to thrive in the digital future.”
Critics say that MNG’s track record of implementing steep cost cuts at its newspapers, including The Denver Post and San Jose Mercury News, is not a recipe for growth.