What: Tribune Publishing board of directors rejected USA Today owner Gannett’s US$815 million offer to acquire the company. In addition, Tribune adopted a “limited duration Shareholder Rights Plan.” Under the plan, known as “Poison Pill” in financial circles, Tribune’s shareholders can double their holdings in the event that another party — in this case Gannett — acquires more than 20 percent of the company.
Why it matters: Tribune Publisher, owner of Los Angeles Times, Chicago Tribune and nine other daily newspapers, said Gannett’s “opportunistic” proposal understates the company’s true value and is not in the best interests of its shareholders. A potential acquisition, would make Gannett’s position, already the largest newspaper publisher in the U.S., even more hegemonic.
Tribune Publishing’s board of rejected USA Today owner Gannett’s US$815 million “opportunistic”offer to buy the company, arguing the proposal understates the company’s real value and is not in the best interests of its shareholders.
In addition, Tribune disclosed that its board has adopted a “limited duration Shareholder Rights Plan.” Under the plan, Tribune’s shareholders can double their holdings in the event that another party — in this case Gannett — acquires more than 20 percent of the company.In common corporate parlance, that’s a “poison pill,” a way to essentially protect corporate insiders from shareholder activism (like Gannett’s intent to buy Tribune).
Tribune publishing is the owner of Los Angeles Times, Chicago Tribune and nine other daily newspapers.Gannett wanted to buy Tribune Publishing with the view of expanding its Network and uniting USA Today with its more than 100 local daily newspapers.
Last month, Gannett offered US$12.25 in cash for each Tribune share plus the US$390 million Tribune’s debt, bringing the total value of the bid to us$815 million. The owner of USA Today publicly announced the proposal two weeks after unsuccessfully making a private offer.
On the other hand, Tribune is in the midst of an strategic plan that includes creating digital subscription services and expanding the LA Times brand globally, which will include opening seven international bureaus this year, including outposts in Hong Kong, Seoul and Mexico City..In addition, the publisher plans to break out the Times’ revenue and profit as a separate segment from the rest of the company, which could boost the sale price and put pressure on Gannett to raise its offer.
“Tribune Publishing is in the early stages of a compelling transformation, with a well-defined strategic plan to drive increasing monetization of our important brands, capitalize on the global potential of the LA Times and significantly accelerate our conversion of content to revenue through an enhanced digital strategy,” Dearborn said in a statement Wednesday.
“Tribune Publishing’s board has unanimously determined that Gannett’s opportunistic proposal understates the company’s true value and is not in the best interests of its shareholders,” Tribune said in a statement.
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