Photographer: Christopher Dilts/Bloomberg

Tribune Board Rejects Gannett’s $815 Million Takeover Proposal

  • Offer undervalues LA Times, Chicago Tribune publisher: board
  • Company unveils `standalone' plan to bolster LA Times globally

Tribune Publishing Co.’s board unanimously rejected a $815 million unsolicited takeover offer from Gannett Co., saying the bid undervalues the owner of the Los Angeles Times and the Chicago Tribune. Gannett said in a statement it’s not going away.

“After thorough consideration, the board has unanimously concluded that it is not prepared to engage with Gannett about a combination of our companies based on the value you indicated in the proposal,” Tribune’s board wrote in a letter Wednesday. “The board believes that the price reflected in the proposal understates the company’s true value and is not in the best interests of our shareholders.”

The newspaper publisher is in the early stages of a strategic plan that includes creating digital subscription services and expanding the Times brand globally, which will include opening seven international bureaus this year, Chief Executive Officer Justin Dearborn said on an earnings call Wednesday following the announcement.

Tribune also plans to break out the Times’ revenue and profit as a separate segment from the rest of the company, which could make the company look more valuable and put pressure on Gannett to raise its offer.

Gannett, in its own statement, called on Tribune to release details of Chairman Michael Ferro’s purchase of shares for $8.50 each in February. The company also said it will press ahead with efforts to undermine investor support for Tribune’s board by soliciting “withhold” votes from stockholders.

Gannett Campaign

“This campaign will allow all Tribune stockholders the opportunity to send a clear message to Tribune’s board that it should substantively engage with Gannett regarding its proposal,” Chairman John Jeffry Louis said in the statement.

Tribune’s rejection of the bid is the strongest sign yet that Ferro, the company’s biggest shareholder, is unwilling to make a deal with Gannett three months after he became chairman. The entrepreneur said Gannett was “trying to steal the company” by pushing for acceptance of its offer before the board could review his strategy for the company and before a June 2 shareholder meeting, Los Angeles Times columnist Michael Hiltzik reported last week.

Gannett offered $12.25 in cash for each Tribune share, a 63 percent premium to Tribune’s closing price on April 22. The owner of USA Today publicly announced the proposal two weeks after unsuccessfully making a private offer.

Board Confident

“The board is confident in our ability to generate shareholder value in excess of Gannett’s opportunistic proposal through our focused execution of this standalone plan,” Tribune said in letter.

Acquiring Tribune would give Gannett a 17 percent share of total U.S. daily newspaper circulation of about 41 million, according to Bloomberg Intelligence. Currently, Gannett has about a 12 percent share, while Tribune has 5 percent with papers that also include the Chicago Tribune and Baltimore Sun.

Tribune , based in Chicago, rose 4.4 percent to $11.50 in trading after the market closed. It has gained 20 percent this year, while Gannett, based in McLean, Virginia, is little changed.

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