February 1, 2022

After a holiday hiatus, hedge fund Alden Global Capital’s attempt at a hostile takeover of Lee Enterprises is heating up again. Recent developments:

  • The issue of whether an Alden affiliate followed the procedures in Lee bylaws for nominating a slate of directors goes to trial in Delaware Chancery Court on Feb. 7. Lee rejected the nominations as invalid. Unless the court sides with Alden, its effort to gain leverage on Lee’s board appears stymied for now.
  • Nonetheless, Alden issued a campaign-like statement Jan. 27 addressed to Lee shareholders. It is targeting the seats of former CEO and current chairman Mary Junck and Herbert Moloney III, two of eight board members. The Alden statement says both are past 70, entrenched for more than 20 years and unwilling to consider alternatives for running the company. (Alden had earlier announced a slate of three candidates but one dropped out.)
  • Lee set its annual meeting for March 10. It has issued its own statement soliciting shareholder approval of its slate, which includes Junck and Moloney.
  • Lee will announce its financial results for the last quarter of 2021 on Thursday. Though the report does not bear directly on the takeover fight, it will offer evidence of whether or not Lee is making rapid progress on digital transformation at its 77 dailies and 350 weeklies as management has claimed.

Alden made an unsolicited bid of $24 a share for Lee in November. Shares are now trading at roughly $36 a share in recent weeks, which makes $24 a non-starter. Alden could increase its bid, or someone else could come in with an offer. Lee’s board would be legally obligated to consider either.

The stakes are high as Alden and other hedge funds have gained control of a growing share of the industry in recent years. Alden has a record of deep cost cuts and selling off real estate at the outlets it owns, most recently those of Tribune Publishing, which it acquired last summer.

While Lee runs tight on expenses, newsrooms would almost certainly get slashed further if Alden buys the company. Its titles include the St. Louis Post-Dispatch, Omaha World-Herald and The Buffalo News.

This piece originally appeared in The Poynter Report, our daily newsletter for everyone who cares about the media. Subscribe to The Poynter Report here.

Correction: Lee will announce its financial results on Thursday.  

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

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