May 23, 2016 Last Updated 8:39 am

Tribune Publishing lands new $70M investment from LA billionaire, and formally rejects the latest Gannett offer

But the publisher of the LA Times and Chicago Tribune said it would begin talks with Gannett concerning a sale, while expressing doubts over Gannett’s ability to make it work

Tribune Publishing announced this morning that it has received a $70.5 million investment from Nant Capital, LLC, issuing 4,700,000 shares of its common stock to the company founded by Dr. Patrick Soon-Shiong and selling them for $15 per share, the price Gannett is offering for the company. That makes Nant Capital the second largest shareholder of TPUB stock, surpassing the share owned by Oaktree Capital Management, which has been pressuring Tribune Publishing to begin serious discussions with Gannett concerning a sale.

LAT-front-300“We are committed to completely transforming Tribune Publishing and Dr. Soon-Shiong is a tremendous addition to those efforts,” Tribune Publishing CEO Justin Dearborn said in the investment announcement. “He is an innovative and visionary leader with a proven ability to leverage technology and research to drive transformative change and create significant shareholder value. Tribune will benefit from Dr. Soon-Shiong’s penetrating insights and unparalleled technology experience as we execute our strategy. Nant Capital’s investment demonstrates strong support for our plan and provides additional capital to accelerate our growth strategies for the benefit of our shareholders and all other Tribune stakeholders.”

Tribune Publishing, likely responding to pressure from its shareholders, also today signaled a willingness to open talks with Gannett about a possible sale. But the publisher of the Los Angeles Times and Chicago Tribune, though, has formally rejected the latest offer from Gannett of $15.00 per share in cash, which probably has everything to do with TPUB stock falling by over 8 percent this morning in pre-market trading.

“The Gannett $15.00 per share proposal for all of Tribune is clearly inadequate as a control investment in Tribune and, as ISS has pointed out, our Board ’has grounds to decline to engage’ on Gannett’s proposal,” said CEO, Justin Dearborn. “We remain unrelenting in our pursuit of value whether on a standalone basis or through a transaction, and believe the $70.5 million growth capital investment announced today from Nant Capital – making Nant Tribune’s second largest shareholder – will support Tribune’s transformation strategy.”

“We continue to have serious doubts about Gannett’s ability to enter into a transaction – especially when you consider its approximate $650 million pension and OPEB liability – that makes sense for Tribune and its stakeholders. However, we stand ready to work with Gannett to assess whether there is a path forward that will create more value for both sets of shareholders,” Dearborn said.

“We continue to have serious doubts about Gannett’s ability to enter into a transaction – especially when you consider its approximate $650 million pension and OPEB liability”

The new investor in Tribune Publishing, Dr. Patrick Soon-Shiong, is a South African-born surgeon, businessman, philanthropist, and professor at University of California at Los Angeles. The billionaire is chairman of the Chan Soon-Shiong Family Foundation and chairman and CEO of the Chan Soon-Shiong Institute for Advanced Health, National LambdaRail, the Healthcare Transformation Institute, in addition to his involvement with Nant Capital. He also owns a minority ownership stake in the Los Angeles Lakers, having bought out Magic Johnson in the fall of 2010.

Despite the new investment by Nant Capital at $15 a share, TPUB stock is falling in pre-marketing trading, down over 8 percent at just over $13 a share.

Gannett’s reply this morning was to express disappointment in the latest developments, and to again urge shareholders to vote “Withhold” to slate of board of directors at the shareholder meeting, But now that the second largest shareholder is in league with Tribune, a successful ‘Withhold” votes seems unlikely. Gannett also said that it has not received a reply from Tribune and appears to be implying that it might just bail on the idea of acquiring Tribune, a move that would likely tank TPUB stock further.

“Despite repeated efforts by Gannett to engage with Tribune regarding its $15.00 per share all-cash premium offer, Tribune has continued to take actions that Gannett believes are designed to convey disproportionate control of the enterprise to select stockholders while ignoring its duties to all Tribune stockholders,” Gannett said today in a statement.

“This share issuance, when combined with the shares sold to an entity controlled by Tribune Chairman Michael Ferro, gives two members of the Tribune Board an ownership position of approximately 30 percent. Tribune again changed the composition of its board without stockholder participation; the newest appointee will not be subject to a stockholder vote for another year.”

Comments are closed.