One thing is becoming clear in the escalating fight between Los Angeles billionaire Patrick Soon-Shiong and Tronc Chairman Michael Ferro: The newspaper company’s largest publication — the Los Angeles Times — is at the heart of their dispute.
Tronc’s two largest shareholders have been trading increasingly acrimonious letters through their attorneys in the battle for control of the company, which also owns the Chicago Tribune and San Diego Union-Tribune.
In the latest letter filed with the Securities and Exchange Commission on Thursday, Tronc attorney Yosef Riemer accused Soon-Shiong and his representatives of working “to coerce the company into selling [Soon-Shiong] the Los Angeles Times. But the L.A. Times is not for sale.”
The letter states that Soon-Shiong offered to buy The Times in December, but was rebuffed and told he must buy all of Tronc. “If [Soon-Shiong] wants to make such a proposal, the board will do its duty and consider it,” Riemer wrote.
Soon-Shiong’s attorney disputed that scenario, saying in a letter Thursday that it was Ferro who approached Soon-Shiong about a possible deal for the L.A. Times.
Gabe Kahn, a journalism professor at USC, said the recent back-and-forth could suggest that a negotiation — albeit an ugly one — is underway.
“[Ferro] just opened up and said, ‘I’m willing to negotiate, but you’re going to have to buy the whole package,’” Kahn said.
Riemer also accused Soon-Shiong of organizing a “smear” campaign and buying Tronc shares without clearance from its top lawyer, in violation of company policy for directors and other insiders.
Riemer’s allegations came in response to a Wednesday letter from John Quinn, an attorney for Soon-Shiong. In that letter, Quinn accused Ferro of attempted self-dealing at Tronc’s expense.
Quinn alleged that Ferro wanted to sell his personal stock holdings in one of Soon-Shiong’s companies to Tronc at well above its market price. In exchange for Soon-Shiong’s support of the deal, Ferro would persuade the board to grant one of Soon-Shiong’s companies 300,000 Tronc shares.
Dennis Culloton, a Tronc spokesman, denied the allegation.
Soon-Shiong first invested in Tronc last summer, at Ferro’s urging, to help the company fend off a buyout bid from Gannett Inc. His initial $70.5-million investment gave him a 12.9% stake in the company and a seat on the board.
The billionaire biomedical entrepreneur has since increased his holdings to 26.7% and, under an agreement signed with the company last year, can’t buy any more shares. He has demanded that he be allowed to buy a 30% stake in the company, the same amount Ferro can own. Ferro currently owns 27.7%.
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