Rival proposes takeover of USA Today publisher

MNG Enterprises, which owns one of the largest newspaper groups in the United States, proposed on Monday a takeover of the giant newspaper publisher Gannett, a move that would further consolidate a struggling industry.

In an open letter to Gannett’s board, MNG said it is willing to pay $12 per share in cash, which represents a 23 percent premium on Gannett’s closing stock price Friday of $9.75 and values the company at $1.36 billion. Gannett’s stock soared 21 percent Monday to close at $11.82.

In its letter, MNG said Gannett, which owns USA Today, the Detroit Free Press, the Cincinnati Enquirer and other publications, has “suffered from a series of value-destroying decisions made by an unfocused leadership team.”

Gannett also owns about a dozen smaller Ohio papers, including the Lancaster Eagle-gazette, Newark Advocate, Chillicothe Gazette and Marion Star.

MNG owns about 200 publications, including The Denver Post and The (San Jose) Mercury News in California, and said it is Gannett’s largest shareholder, holding a 7.5 percent stake.

Gannett, which is based in Mclean, Virginia, said its board will review the unsolicited proposal, and it told shareholders that “no action needs to be taken” at the moment.

MNG, or Medianews Group, operates under the name Digital First Media and is owned by Alden Global Capital, a New York hedge fund.

Alden has been widely criticized for the layoffs it has imposed on newspapers it acquires.

On Monday, MNG asked Gannett to immediately review strategic alternatives and commit to a freeze on acquisitions of digital businesses, which MNG said Gannett has overpaid for in the past. It added that Gannett also should develop a better strategy before hiring a chief executive to replace Robert J. Dickey, who is set to leave in May.

MNG said it had previously approached Gannett several times about a potential deal but was ignored. In its letter, MNG criticized Gannett’s “ill-fated” attempt in 2016 to take over Tribune Publishing, the newspaper publisher then known as Tronc.

“Frankly the team leading Gannett has not demonstrated that it’s capable of effectively running this enterprise as a public company,” MNG wrote.