May 20, 2016 Last Updated 7:55 am

Latest Gannett letter to TPUB shareholders tries to remind them there is money to be had

Tribune Publishing reacts with terse statement saying that ‘once again, Jeff Lewis and Robert Dickey are misleading investors with half-truths and conjecture’

The Board of Directors of Gannett sends more letters to the shareholders of Tribune Publishing than a love-sick freshman at university sends to their high school sweetheart – and likely with the same reaction: ‘who is that guy, again?’

justnotintoyouBut it is hard to blame the Board, they want to overpay for a company that lost $6.5 million last quarter, and continues to see its ad revenue decline. All Gannett wants is for the TPUB shareholders to take their money and leave on a nice vacation while the new owner begins to trim the staff at the Tribune papers.

Meanwhile, Tribune’s CEO, Michael Ferro, reportedly said he might bid on Gannett. Turnabout is fair play, after all, though what Tribune might bid could be a source of much hilarity. That is, until it isn’t – when you are in debt what is being a billion more matter? After all, there is always bankruptcy court.

But, in the meantime, Tribune is denying that they haven’t been talking to each other (actually, it looks like they have been talking at each other).

“Once again, Jeff Lewis and Robert Dickey are misleading investors with half-truths and conjecture designed to mask their desperate need to acquire Tribune Publishing to save their own business and their positions,” Tribune Publishing said in a press release response. “This latest statement contradicts what Gannett has been stating to our shareholders, that we haven’t been engaged in discussions.”

Well, here is the latest letter, with Tribune’s response below it. But, if you ask me, with TPUB stock now at over $14, I’d hate to see what happens to the stock price if the company finally ends this whole thing and again rejects the offer. Just four weeks ago remember TPUB was going for $7.33 a share.

May 20, 2016

Dear Tribune Publishing Company Stockholder,

On May 16, 2016, Gannett Co., Inc. (“Gannett”) increased its offer to acquire all of Tribune Publishing Company (“Tribune”) to $15.00 per share from $12.25 per share. Gannett’s offer represents certain and superior cash value for your shares during an increasingly uncertain time for the industry. The $15.00 per share offer price represents:

  • 99% premiumto the $7.52 closing price of Tribune’s common stock on April 22, 2016, the last trading day before Gannett publicly announced its initial offer for Tribune, and
  • 76% premium to the $8.50 per share price at which Tribune recently sold common stock to an entity controlled by Michael Ferro, who was then made Tribune’s chairman.

On May 4, 2016, Tribune’s Board of Directors (the “Tribune Board”) formally rejected Gannett’s initial offer of $12.25 per share, without entering into substantive discussions, making a counteroffer or otherwise engaging with Gannett. While Gannett has since increased its offer for Tribune, the Tribune Board has yet to respond to or engage with Gannett regarding the increased offer. By not engaging constructively with Gannett regarding its offer and continuing to pursue a substance-free, newly developed and unproven strategy based on “Tronc,” we believe the Tribune Board is jeopardizing your investment and disregarding your best interests. 


Do not let the Tribune Board stand in the way of your obtaining superior and certain cash value for your shares.

Tribune’s 2016 Annual Meeting of Stockholders, scheduled for June 2, 2016, is an opportunity for you to influence the value of your investment. Gannett strongly urges you to WITHHOLD” votes for ALL of Tribune’s director nominees on the enclosed GOLD proxy card today. By voting WITHHOLD” for all of Tribune’s director nominees, you are sending a clear message that Tribune stockholders want the Tribune Board to engage immediately in a constructive dialogue with Gannett regarding its offer.


We believe the Tribune Board is disregarding your interests by preventing you from realizing superior and certain cash value for your shares. The Tribune Board:

  • Rejected Gannett’s initial offer outright, without entering into substantive discussions, making a counteroffer or otherwise engaging with Gannett, even though Gannett’s initial offer represented a significant premium to Tribune’s unaffected stock price and far exceeded the $8.50 per share price at which Tribune recently issued common shares to an entity controlled by Michael Ferro;
  • Implemented a “poison pill” that provides yet another roadblock to stockholders realizing superior and certain cash value for their investment; and
  • Has allowed its chairman, Mr. Ferro, to publicly state that Tribune is not for sale at any price, despite public statements from Tribune stockholders urging Tribune to engage, as well as wide public recognition of the financial benefits of the proposed transaction.

Gannett believes that the Tribune Board’s conduct is rooted in significant corporate governance deficiencies that were exacerbated when the Tribune Board sold control of Tribune to Mr. Ferro at a discount. In February 2016, Tribune sold approximately 16 percent of Tribune’s common stock to an entity controlled by Mr. Ferro for $8.50 per share. The $8.50 per share price represented a discount of $0.50 or six percent from Tribune’s closing stock price on February 3, 2016, the day prior to the announcement of Mr. Ferro’s investment. Mr. Ferro, Tribune’s newly crowned chairman, then led the Tribune Board in taking a series of steps that we believe have conveyed disproportionate control to Mr. Ferro. We’ve outlined the significant deterioration in Board independence on side A of the accompanying enclosure.


As depicted on side B of the accompanying enclosure, while Mr. Ferro owns a minority stake of approximately 16 percent of Tribune, after the June 2, 2016 Annual Meeting, we believe Mr. Ferro will control a majority of the Tribune Board. The significant ties between Mr. Ferro and these director nominees should trouble all Tribune stockholders (other than Mr. Ferro). Mr. Ferro has an unproven track-record in the publishing industry, and his tenure as an ineffective operator with The Chicago Sun-Times is well-documented and resulted in a poor outcome. If the Tribune Board cannot act independently of Mr. Ferro, as its recent actions suggest, it casts legitimate doubt on the prospect of a successful future for Tribune.


Mr. Ferro has made clear that his own self-interest, and not the best interests of all of Tribune’s stockholders, is guiding his response to Gannett’s offer. During a May 12, 2016 meeting with Gannett’s chairman and Gannett’s chief executive officer, Mr. Ferro stated that a business combination between Gannett and Tribune could make sense as long as Mr. Ferro would have a “significant role” at the company post-closing and was its “largest shareholder.” Mr. Ferro went on to state that he is unwilling to engage in a process unless he, personally, would get “a piece of the action.”


Whether or not you plan to attend the 2016 Annual Meeting, we strongly encourage you to make your voice heard by using the enclosed GOLD proxy card today to WITHHOLD your votes with respect to ALL of the director nominees to the Tribune Board.  Send them a message they can’t ignore and let them know you expect them to engage with Gannett, in order to provide you with the opportunity to realize superior and certain cash value for your shares.


The Gannett Board of Directors

…and the response:

CHICAGO, IL – May 20, 2016 — Tribune Publishing Co. today issued the following statement in response to Gannett’s May 20 letter to Tribune Publishing shareholders:

“Once again, Jeff Lewis and Robert Dickey are misleading investors with half-truths and conjecture designed to mask their desperate need to acquire Tribune Publishing to save their own business and their positions. This latest statement contradicts what Gannett has been stating to our shareholders, that we haven’t been engaged in discussions. To set the record straight, Mr. Ferro’s alleged comments in the May 12 meeting were grossly mischaracterized and taken out of context. As he has stated repeatedly in public, Mr. Ferro indicated that Gannett’s previous proposal, while certainly in the best interests of Gannett shareholders, was not in the best interest of Tribune shareholders.

“Our focus at Tribune Publishing is clear. We are prepared to engage regarding any reasonable proposal that delivers value for our shareholders, but we will not succumb to hostile tactics designed to steal the Company from our shareholders. Tribune Publishing has consistently engaged with Gannett, including a May 12 meeting between our Chairman and CEO and Messrs. Lewis and Dickey, requested by Tribune, which was notably followed by Gannett’s revised proposal increasing their offer to acquire the Company. We are executing a plan to transform the Company in response to the massive changes which have overtaken the publishing industry. The sole focus of Tribune Publishing and our Board of Directors remains acting in the best interests of all shareholders.

“Notwithstanding the fact that Gannett continues to engage in the reckless use of false and misleading comments about the meeting between the companies on May 12 and has resorted to ad hominem attacks on the Tribune Publishing Board, our Board is in the process of dispassionately, thoughtfully and thoroughly reviewing Gannett’s latest proposal and will respond to it in short order.”

As previously disclosed, the Tribune Publishing Board of Directors, in consultation with its independent financial and legal advisors, is reviewing Gannett’s revised proposal to acquire all outstanding shares of Tribune Publishing common stock for $15.00 per share in cash.

Goldman, Sachs & Co. and Lazard are acting as financial advisors and Kirkland & Ellis LLP is acting as legal advisor to Tribune Publishing.

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