• by Sara Guaglione , May 9, 2016

Tribune Publishing is ramping up its defenses against Gannett’s acquisition proposal. The company today announced that its board of directors has adopted a limited-duration shareholder rights plan to fend off a hostile takeover.

Otherwise known as a “poison pill,” this rights plan was “designed to deter any attempt to obtain control of the Company in a manner or on terms that are not in the best interest of shareholders,” Tribune Publishing said in a statement.

The rights plan will trigger when a person or group acquires 20% or more of Tribune’s common stock. Each shareholder will then receive a market value of two times the exercise price. The plan will expire in one year.

According to TheWall Street Journal, these poison pills are designed to “dilute the value of stock by flooding the market with additional shares if certain conditions are met.”

In other words, this rights plan would make it even more expensive for an investor to acquire a controlling stake.

“Based on Gannett’s approach and continued hostility, the Board is taking prudent measures to protect our shareholders’ best interests," stated Justin Dearborn, CEO of Tribune. "The Rights Plan ensures shareholders receive fair treatment and protection in connection with any proposal to acquire Tribune Publishing and retain the opportunity to realize the value of their investment in the Company."

Dearborn added that Tribune stakeholders “deserve better” than Gannett’s “current tactics and low-ball price.”

Chairman Michael Ferro added in a statement: “Tribune’s assets and brands, including the Los Angeles Times and the Chicago Tribune, are worth far more than Gannett’s proposal, which is a non-starter. We are focused now on supporting our team as they execute on our plan.”

As Publishers Daily previously reported, Dearborn has plans to transform Tribune Publishing by driving revenue from content brands, growing the Los Angeles Times globally and creating digital subscription services.

According to Poynter, Gannett responded to Tribune's new tactic in a statement this morning, calling the move "another roadblock to prevent its stockholders from realizing compelling, immediate and certain cash value for their investment."

On Friday, Tribune’s second-largest shareholder, Oaktree Capital Group, publicly urged the board to engage in negotiations with Gannett. Oaktree Capital Group said it would be in the best interest of shareholders for the board “to pursue discussions with Gannett to see if an acceptable agreement can be reached.”

But Ferro, whose company, Merrick Media, owns a 16.6% stake in Tribune Publishing, told the Chicago Tribune Thursday that the company was "not for sale."

Gannett’s original bid offers to buy Tribune for $815 million at $12.25 per share.