A Tribune Publishing Co. shareholder has filed a lawsuit against the company, accusing its board of breaching its fiduciary duty by refusing to engage in acquisition talks with Gannett Co. while selling a large stake to a new investor.

The shareholder, Capital Structures Realty Advisors LLC, filed the derivative lawsuit in Delaware Chancery Court against Chairman Michael W. Ferro Jr. and the rest of the Tribune board, seeking to block the sale of a large stake in Tribune to Dr. Patrick Soon-Shiong. Last week, Tribune agreed to issue shares to Dr. Soon-Shiong for $15 a share, while simultaneously rejecting a takeover offer from Gannett at the same price.

Dr. Soon-Shiong is an entrepreneur, biotech investor, physician and scientist. He is widely known as one of the richest men in Los Angeles because of his innovations in the health-care sector.

At the time of the deal, Dr. Soon-Shiong said his professional background and his longtime interest in journalism happened to collide at the right moment, as he was approached by members of the Tribune board about the investment.

The suit charged that the deal, which also gave Dr. Soon-Shiong a board seat, was done to entrench the control of the board in Mr. Ferro's hands.

"Ferro and the board sold 13% of the company to defendant Soon-Shiong for one reason, to consolidate their control over Tribune in the face of mounting pressure from the company's stockholders," the suit said.

A spokeswoman for Tribune didn't immediately respond to a request for comment.

The suit was filed ahead of Tribune's annual meeting Thursday, where Gannett has asked shareholders to withhold their votes for the board in a symbolic show of no confidence. Several large shareholders, like Oaktree Capital Management and Towle & Co., have signaled they plan to withhold their votes.

But Mr. Ferro has gained the support of three proxy advisory firms, Institutional Shareholder Services, Glass, Lewis & Co. and Egan-Jones Rating Co., and big institutional investors often follow such recommendations.

Write to Lukas I. Alpert at lukas.alpert@wsj.com

(END) Dow Jones Newswires

June 02, 2016 11:55 ET (15:55 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
New Gannett (NYSE:GCI)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more New Gannett Charts.
New Gannett (NYSE:GCI)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more New Gannett Charts.