Tribune Publishing Rejects Gannett's Latest Offer, Adds Billionaire Shareholder
May 23 2016 - 8:20AM
Dow Jones News
Tribune Publishing Co. on Monday rejected a sweetened takeover
offer from Gannett Co., insisting its turnaround plan is better
than Gannett's bid, and said a billionaire entrepreneur would take
a $70 million stake in the company.
Tribune Publishing Chief Executive Justin Dearborn said
Gannett's offer of $15 a share "is clearly inadequate as a control
investment in Tribune." A representative from Gannett couldn't
immediately be reached for comment.
Mr. Dearborn said he has "serious doubts" about Gannett's
proposal, but "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."
In that vein, Tribune said it had invited Gannett to an
agreement under which the companies could engage in discussions to
see whether a transaction was in the best interests of Tribune and
Gannett shareholders.
That move comes as Gannett has signaled it could abandon its bid
to acquire Tribune if not enough Tribune shareholders indicate
support for a tie-up.
Also on Monday, Tribune Publishing said it would receive a $70.5
million growth-capital investment from Nant Capital LLC, which was
founded by Patrick Soon-Shiong, in exchange for Tribune common
stock. Tribune has agreed to issue 4.7 million shares of its common
stock to Nant Capital at $15 a share, the same price that Gannett
proposed in its raised bid.
Mr. Dearborn said the 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."
Following the transaction, Nant Capital will own about 12.9% of
Tribune Publishing's shares outstanding, making it Tribune's
second-largest shareholder.
Mr. Soon-Shiong has been invited to join the company's board as
a vice chairman. He will begin serving on June 2—the day of the
company's annual shareholder meeting.
Mr. Soon-Shiong, who launched and sold two biotech startups
together worth nearly $8 billion, heads a firm that funds ventures
related to health care, life sciences, medical diagnostics, mobile
technology, semiconductors, nano-optics, artificial intelligence,
cloud computing, alternative energy and scientific innovations.
Gannett raised its unsolicited offer on May 16 to $15 a share,
double the price at which Tribune shares were trading before
Gannett's initial offer was made public. On May 4, Tribune's board
unanimously rejected the initial $12.25-a-share bid, which it said
undervalued the company.
A merger of the two companies would tie household news outlets
such as Gannett's USA Today and Tribune's Los Angeles Times under
one firm, as newspaper companies have struggled in recent years in
part from disruptions caused by the Internet.
Gannett has asked Tribune shareholders to withhold their votes
for the company's board at the annual meeting on June 2, as a way
to send a message to the Tribune board that it is not acting in the
best interest of investors. Meanwhile, Oaktree Capital Management,
one of Tribune's largest shareholders, has urged the board to
engage in talks, saying it had little confidence the company's new
management team can achieve value equivalent to the Gannett
deal.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
May 23, 2016 08:05 ET (12:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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