Tribune Publishing turned down a $864 million offer from Gannett to buy the company on Monday as it announced a $70 million investment from a new shareholder.
The pair of developments is the latest in a weeks-long battle between Tribune Publishing and Gannett for control of the company and 11 of America’s most storied daily newspapers, including the Los Angeles Times and the Chicago Tribune.
In a press release announcing its decision to reject the offer, Tribune called Gannett’s bid “clearly inadequate.”
“The Gannett $15.00 per share proposal for all of Tribune is clearly inadequate as a control investment in Tribune and, as ISS has pointed out, our Board ‘has grounds to decline to engage’ on Gannett’s proposal,” Tribune Publishing CEO Justin Dearborn said in a statement.
As it rejects the offer, which is Gannett’s second, Tribune Publishing will allow the newspaper company to look at its books, an arrangement that may speed further negotiations.
Also on Monday, Tribune announced a $70 million investment from Nant Capital, LLC, in exchange for 4.7 million shares of stock. The capital will go towards a plan, articulated by Tribune earlier this year, to transform the company by making the Los Angeles Times a standalone business covering entertainment and establishing a business unit powered by “artificial intelligence” called Tronc.
By issuing millions of shares of new stock, Tribune Publishing also dilutes the holdings of existing investors who might urge a deal with Gannett, like Los Angeles-based Oaktree Capital.
The investment was announced after an exchange this weekend between Tribune Publishing and Oaktree, Tribune’s second-largest shareholder. In a letter sent to Tribune’s board on Friday, Oaktree urged Tribune Publishing to establish an independent committee to evaluate Gannett’s proposal and determine an appropriate response.
In another letter, sent to Tribune’s board Sunday, Oaktree said Tribune Chairman Michael Ferro asked the Los Angeles-based investment firm whether it would sell its shares to “an unidentified party” who would buy them. Oaktree says it declined, preferring the company negotiate with Gannett:
We do not know anything about the identity of the purported buyer or whether a transaction could have been arranged. Nor do we know whether the purported buyer was independent of Mr. Ferro.
Meanwhile, between Gannett’s reported willingness to make a third bid for the company and Ferro supposedly mounting a campaign to buy Gannett, the struggle for control of Tribune Publishing appears far from over.
The maneuvering comes in advance of Tribune’s annual shareholder meeting, scheduled for June 2, where the company plans to elect a slate of nominees to its board of directors.
Gannett has urged shareholders to withhold their votes for the nominees to “send a message” to Tribune’s leadership. On Sunday, Tribune Publishing said Institutional Shareholder Services Inc., a corporate governance advisory firm, recommended Tribune shareholders vote “for” the majority of the Company’s directors and not support Gannett’s withhold campaign.
Note: This post has been updated to note Tribune’s investment from Nant Capital and Tribune’s rejection of Gannett’s offer.