Lee Enterprises fired another volley Friday morning in its attempt to fend off a hostile takeover bid by hedge fund Alden Global Capital.
Specifically, it rejected Alden’s attempt to nominate a slate of three board directors, filed a week ago, right on the deadline for shareholders to propose candidates. Lee said the nominations, which it had earlier described as “purported,” did not follow the company’s bylaws and would not be honored.
This is one more signal that Lee, publisher of 77 dailies including the St. Louis Post-Dispatch and The Buffalo News, is digging in for a protracted fight. Earlier Lee put in place a shareholder’s rights plan, a so-called poison pill defense that aims to block Alden from increasing its ownership of shares beyond 10% over the next 12 months.
Alden and related companies now own a little over 6% of Lee’s stock.
Lee management (and union chapters at its papers) have argued that the company is making progress on its own and will best serve its communities by continuing on that course and keeping out Alden, which is notorious for its cost-cutting at the many newspapers it now controls.
Alden submitted a bid for the company at $24 a share on Monday, Nov. 22. That would be a 30% premium on the stock’s closing price the previous Friday. Lee acknowledged receiving the offer but did not accept.
The takeover fight has been fast-moving over the last two weeks. Both sides are now lawyered up and have hired transaction and financial public relations advisers.
Getting seats on Tribune Publishing’s board was a step along the way in Alden’s two-year campaign to acquire that company, which it did this summer. Having its own directors at the table would allow Alden to exert similar influence on Lee’s top management.
Typically, a vote on rival slates of directors only happens once a year at an annual meeting. Lee said in a press release Friday that the time and place of the 2022 annual meeting has not yet been set. This year’s was in late February.
So if Lee’s action stands, it would at a minimum buy time.
Representatives of Alden did not respond to my request for comment on the directors question. I will add that if I get it, but a response would more likely come in the form of a press release and a filing with the Securities and Exchange Commission.
Hedge fund ownership, Alden’s in particular, has become a huge issue for the newspaper industry over the last several years. At papers Alden owns like the Chicago Tribune and Denver Post, the fund has shown little inclination to invest in journalism and, in fact, has made deep newsroom cuts.
Saving financially vulnerable papers has now risen to the level of proposed $1.75 billion federal legislation that would pick up as much as 50% of the salaries of local journalists