Gannett asks Tribune Publishing shareholders to withhold support for board nominees
Gannett is ramping up its efforts to acquire Tribune Publishing by going directly to shareholders, but not going so far as to initiate a hostile takeover bid for the Chicago-based publisher of the Los Angeles Times and Chicago Tribune.
In a filing made with the Securities and Exchange Commission on Monday, Gannett asks shareholders of Tribune Publishing to withhold support for the slate of eight board nominees to be considered at Tribune Publishing’s annual meeting June 2 in Chicago.
Withholding support for the slate would send a message to Tribune that shareholders want the company to engage in “good-faith negotiations” about its proposal made to acquire Tribune Publishing in an all-cash offer for $12.25 per share, Gannett said in the filing.
However, Gannett said, Tribune Publishing’s slate of directors would be elected even if shareholders vote to withhold support because the directors are elected by a plurality of the votes cast, and no alternative slate is proposed by Gannett.
Tribune Publishing responded Monday by saying it was evaluating the purchase offer and said Gannett’s suggestion otherwise was “misleading and disingenuous.”
That offer, made public April 25, valued Tribune at $815 million, including the assumption of $390 million in debt. It was a 63% premium over the closing price of $7.52 a share on April 22.
At the time, Gannett said it took its offer public after not receiving what it considered a prompt response from Tribune, and contended the company was trying to “delay constructive engagement.” Last week, the CEOs of both companies traded accusations about the proposal and in an interview with the Los Angeles Times, Tribune Publishing Chairman Michael Ferro contended Gannett was “trying to steal the company.”
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Monday’s filing by Gannett indicated there had been little movement toward the substantive dialogue it sought. The company noted it was not asking shareholders to vote on a sale of Tribune Publishing, and that its offer still required due diligence and a definite merger agreement.
“Tribune has refused to engage in constructive discussions with us. We therefore want to make you, Tribune stockholders, aware of our all-cash offer given Tribune’s attempts to delay constructive engagement,” Gannett said in its filing. “We believe a withhold vote on the company nominees would send a clear signal that you, as a Tribune stockholder, want your board to engage in a meaningful dialogue with us regarding a possible business combination between our two companies.”
In a statement, Tribune said, “As we said previously, our board has engaged financial and legal advisers to review the Gannett proposal, and the board will announce the results of its evaluation of the Gannett proposal as soon as feasible. Gannett’s campaign to suggest that our board has not taken its proposal with due seriousness is misleading and disingenuous.”
“The facts belie their public statements,” Tribune’s statement continued. “This latest ploy to encourage Tribune Publishing shareholders to withhold their votes at the 2016 annual meeting is a distraction from the real issue, which is whether the Gannett proposal is credible. We are confident that we will have the quorum necessary to hold our annual meeting and that the nominees to the board, who are unopposed, will earn the plurality of votes necessary to be elected.”
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