May 16, 2016 Last Updated 1:32 pm

Gannett increases offer for Tribune Publishing to $15 a share

Unable to get negotiations started, publisher of USA Today ups its offer for the newspaper chain more than 20 percent, hoping shareholders will force Tribune management’s hand

The pressure on Tribune Publishing to begin discussions with the publisher of USA Today may grow today as Gannett this morning increased the price it said it would pay by over 20 percent. Gannett now says it is prepared to pay $15 per share for Tribune stock, up from their previous offer of $12.25 a share.

LA Times, Chicago Tribune, Baltimore Sun newspapers“Our increased offer demonstrates our commitment to engaging in serious and meaningful negotiations with the Tribune Board to reach a mutually agreeable transaction where Gannett acquires all of Tribune,” John Jeffry Louis, Chairman of the Gannett Board of Directors, said. “It is evident from our discussions with Tribune shareholders that there is overwhelming support for the companies to engage immediately regarding our proposed transaction. By increasing our offer at this time, we are reaffirming Gannett’s belief that this transaction would deliver significant value to both companies’ stakeholders and that the time to act is now. We encourage Tribune’s shareholders to send a clear message to their Board to engage immediately with Gannett regarding our revised all-cash, premium offer.”

Last week, Tribune management adopted a poison pill approach in order to thwart Gannett’s acquisition ambitions. Under the plan, should a buyer come in and acquire 20 percent or more of the company, shareholders would be eligible to sell their shares at twice the exercise price.

“Based on Gannett’s approach and continued hostility, the Board is taking prudent measures to protect our shareholders’ best interests,” said Justin Dearborn, CEO of Tribune Publishing. “The Rights Plan ensures shareholders receive fair treatment and protection in connection with any proposal to acquire Tribune Publishing and retain the opportunity to realize the value of their investment in the Company.”

Not surprisingly, the latest offer of $15 per share is driving up TPUB shares this morning in pre-market trading. Tribune Publishing shares were up over 20 percent to $14.15 a share. At the same time Gannett has raised its offer, they continue to work to get shareholders to “Withhold” votes for the eight nominees to the Tribune Board at the shareholder meeting in June, hoping a new board will be more open to a sale.

The big winner here is Michael Ferro, chairman of Tribune Publishing, who invested $44.4 million earlier this year to become the largest shareholder, and now can double his investment should he decide to give in.

Tribune’s second largest shareholder, Oaktree Capital Management, which owns just under 15 percent of TPUB shares, has already said it wants Tribune to engage with Gannett in discussions.

“Consistent with its fiduciary duties and commitment to acting in the best interests of shareholders, and in consultation with its financial and legal advisors, Tribune Publishing’s Board of Directors will thoroughly review Gannett’s revised proposal,” the publisher of the Los Angeles Times and Chicago Tribune said in a statement.

Newspaper stocks are generally cheap compared to historic averages, making them attractive investments for some who just can’t believe that the business can’t be turned around. But those investments have not proved out as the newspaper industry continues to suffer declining print advertising levels. So, the question some might start asking, now that Gannett is upping its offer price, is whether a deal now really is such a good thing from Gannett.

Comments are closed.