Gannett Co.’s Anti-Takeover Plan Opposed

Cincinnati financier Carl H. Lindner revealed Thursday that he hopes to block proposals to protect Gannett Co., owner of the largest number of newspapers in the country, from a hostile takeover.

In a combination of moves that one Wall Street analyst called “strange,” Lindner also acquired an additional 351,000 Gannett shares Wednesday, raising his share to 5% and requiring a filing with the Securities and Exchange Commission. In the filing papers, Lindner voiced his objections to the Gannett proposals.

In the SEC filing, American Financial, the investment holding company that Lindner controls as chairman, said it intends to vote against Gannett’s anti-takeover proposals at the newspaper company’s May 21 annual meeting because the proposals “are not in the best interest of Gannett’s shareholders and would adversely affect the market value of Gannett common stock.”

American Financial said it is also considering trying to persuade other institutional investors to join its opposition.

Wall Street analysts were uncertain about Lindner’s precise motives in acquiring the stock and filing his objections. Several felt that Gannett probably already knew that Lindner opposed the anti-takeover proposals, and some speculated that Lindner acquired the Gannett stock Wednesday to generate publicity for his position.

Sees No ‘Takeover Play’

“To think that this is at the base of some takeover play doesn’t make a lot of sense,” said R. Joseph Fuchs, a vice president of research at the New York brokerage firm of Kidder, Peabody & Co. “That would be a $6.5-billion deal. That is not Friday-night drink money.”

Lindner stated in the SEC papers that he has no intention of acquiring additional stock, nor any interest in a merger or an “extraordinary corporate transaction.”

Even before his purchase Wednesday, Lindner, who now owns about 4 million Gannett shares, was the company’s second-largest shareholder.

Gannett stock rose in heavy trading Thursday to a 52-week high of $62.125 at one point on the New York Stock Exchange but closed up just 50 cents at $59.50. The trading was fueled by a third day of speculation that CBS might acquire Gannett as a way of fending off its own takeover threat from Ted Turner, but most analysts said the rumors were unfounded.

Lindner’s move comes at a time when the merger winds are whipping down Wall Street at gale force, particularly around communications companies.

The same day Lindner filed his papers, for instance, shareholders in Knight-Ridder, another major newspaper company, approved anti-takeover measures at their annual meeting similar to those proposed by Gannett.

Two Gannett proposals are at issue. The first is a “fair price amendment” to Gannett’s corporate bylaws, which would require any merger, as well as some other transactions, to have the vote of 80% of the outstanding common shares. Current rules require a simple majority.

The second proposal would change the length of terms of Gannett’s directors so that only one-third of the board could be voted out at an annual meeting.

Gannett Chairman Allen H. Neuharth issued a statement Thursday asserting that “all shareholders of the company should benefit fairly and equally from the future increases in the value of Gannett stock. The proposed amendments are to help ensure that.”