Gannett rejected a takeover offer from Media News Group/Digital First this morning, and it did not do so politely.
A letter from the Board of Directors expressed doubt that Digital First could come up with money to finance the offer. And Gannett added an unusual slam of the potential buyer.
Based on Digital First’s cut-and-slash management of the Denver Post and other properties, Gannett questioned whether it would be able to run the 109 Gannett regional papers and USA Today in the best interests of the communities served.
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An earlier letter from to MNG Gannett’s Board Chairman J. Jeffry Louis put it this way:
You noted that under your ownership, you could “provide a home for the Company’s businesses and valued employees so they can continue to serve their local communities.” Within the industry, MNG has a well-documented history of significantly reducing editorial staff and cutting costs at its acquired properties.
Could you explain more specifically what the statements in your proposal are intended to mean with respect to your plans for the existing businesses and employees, and in particular how you intend to achieve the objectives of maintaining value during the pendency of any transaction, and thereafter?
For example, what commitments would you be willing to make to maintain newsroom staffing and ensure any acquired publications can continue to produce high- quality local journalism and contribute to the communities they serve? More generally, could you describe your operating plan going forward, and whether you would break up the company or pursue other strategic alternatives, including specifically with respect to international and/or digital?
Media News Group answered back with a letter and press release of its own. It said that Gannett was rejecting a premium offer with only vague plans about how management could increase the value of the company.
It is unclear whether Gannett might entertain a second offer from MNG higher than the current bid of $12 share. And another large company like Tribune Publishing or McClatchy conceivably could be merged with Gannett.
Media News Group and its backer, hedge fund Alden Global Capital, also indicated it may pursue the matter by trying to get directors of its choosing onto the board. And legal action is possible.
Gannett and McClatchy both made substantial newsroom layoffs or buyout offers in January. Neither has yet reported financial results for the final quarter of 2018 — or even scheduled a date to release them. Bad news of more revenue declines is almost certainly coming.
Gannett shares were down about 3 percent in midday trading, a relatively small decline suggesting Wall Street sees some sort of merger or acquisition still in prospect.