Invited in at $15, tronc shareholder now in fight with CEO over ownership stake
With one troublesome shareholder bought out at $15, now the one brought in to beat off Gannett is unhappy with the way things have turned out, may need their own buyout offer
The CEO of tronc, formerly Tribune Publishing, has made some smooth moves in the 13 months be has been involved in the company. After investing $44.4 million Michael Ferro moved out the previously CEO, Jack Griffin, then beat off a takeover bid by Gannett.
But one of the ways he managed to spurn Gannett was bringing in a new shareholder, Patrick Soon-Shiong, the billionaire doctor from Los Angeles, whose Nant Capital invested $70.5 million in what was then called Tribune Publishing.
Yesterday, The New York Times reported that Soon-Shiong’s lawyer sent a letter to the tronc board asking that he be able to raise his stake in the company to 30 percent. Apparently the investor has a bad taste in his mouth after buying his shares at $15 only to see the stock fall below that level (today it is trading just below $14).
Of course, the reason tronc stock is even that high is due in large measure to the bids put forward by Gannett last year. The first offer was 12.25 per share for TPUB stock, raised to $15 a share in May. One week later enter Soon-Shiong, acquiring 4,700,000 shares and formally rejecting Gannett’s offer.
Maybe Soon-Shiong was convinced that Gannett would raise its offer again, but things didn’t work out that way.
The latest move involving shareholders was to buy out Oaktree Capital Management, which wanted tronc to accept that $15 a share offer. It sold out at $15 a share, with tronc spending $56.2 million to rid itself of its third largest shareholder (Ferro and Nant Capital being one-two).
The move prevents Nant from teaming up with Oaktree in the future, and so again tightens Ferro’s hold on the company. The problem is that if Nant were to sell out, even at a loss, tronc stock could tank. That is likely what Gannett is hoping for, though I still have a hard time figuring out how they could afford a takeover as things have not gone well there as of late.
The tronc board has approved a move by Ferro to up stake in the company from 24.8 percent to 30 percent, but the fight will go on.
“Ferro is now fighting with his white knight; the guy who helped him thwart Gannett has now emerged as a rival,” Lance Vitanza of Cowen & Co. told The Street late last week. “There is a certain comic irony to this that it notable.”
One wonders if the fight is actually over the stock price, control of the whole company, or just those Southern California assets – the Los Angeles Times and San Diego Union Tribune. Tribune wanted to add the Orange County Register, but the Obama administration’s Department of Justice stopped the deal, handing the property to the financially shaky Digital First Media. Maybe the price to get rid of Soon-Shiong could be to give up on the California dream.