May 23, 2016 Last Updated 3:07 pm

Tribune Publishing stock falls 15% after Gannett hints it may pull its $15.00 per share offer

In a market largely trading flat today, Tribune Publishing stock is having an exceptionally bad day, dropping over 15 percent.

The reason is likely the prospect that the Gannett offer to buy the publisher of metro dailies such as the Los Angeles Times and Chicago Tribune may be pulled following news that Tribune has bought in another large investor and will has formally rejected Gannett’s offer to pay $15 per share.

Tribune today announced that it had brought in Nant Capital, LLC, issuing 4,700,000 shares of its common stock to the company founded by Dr. Patrick Soon-Shiong. Nant paid $15 per share to become the second largest shareholder behind company chairman Michael Ferro. That diluted the power of Oaktree Capital Management, which had been pushing for the sale.

Tribune CEO Justin Dearborn said that the company had rejected the latest offer from Gannett, and expressed doubts that Gannett could make the deal work, but also said that Tribune would hold talks with Gannett.

“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.

But Gannett immediately released a statement saying that Tribune Publishing was not, in fact, talking to Gannett, and that the owner was not working in the best interests of TPUB shareholders.

“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.

In the end, a dead deal would mean that TPUB shares would likely fall back to their original value before Gannett emerged as a possible suitor, around $7.50 a share. But the company will have a cash infusion, something it may well need as Tribune Publishing was spun off of the Tribune Company with a debt to manage, and with ad revenue continuing to fall at its print newspapers.

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