Tribune Publishing Shareholder Oaktree Wants Company To Consider Gannett Bid

Tribune Publishing's second-largest shareholder, Oaktree Capital Management, formally urged the newspaper publisher today to take Gannett’s offer to buy the company for $864 million.

In a letter to Tribune Publishing's board -- signed by Oaktree vice chairman John B. Frank -- the company said it has come to the conclusion that Gannett's offer would deliver more value for shareholders, in comparison to the business plan Tribune Publishing chairman Michael Ferro and his management team have in mind.

“We have met with Michael Ferro and spoken with him on the phone, and we have listened to his ideas about building value as a standalone company through a digital transformation of Tribune. The ideas we have heard appear to be preliminary and involve great execution risk,” Oaktree said in the letter filed with the Securities and Exchange Commission today.



“Companies with much greater resources than Tribune and with a substantial head start are struggling in a rapidly changing environment to effect digital change that is profound enough and quick enough to overcome the outgoing tide of print revenues,” the letter continued.

So far, Ferro and Tribune Publishing CEO Justin Dearborn have stuck to their guns, believing in their plan to transform Tribune Publishing without Gannett’s ownership. Dearborn plans to drive revenue from content brands, grow the Los Angeles Times globally and create digital subscription services.

Ferro is Tribune Publishing's largest shareholder, with a 16.5% stake.

“We have not seen anything to give us any confidence that Tribune on its own, with the resources and competitive position it has today, can achieve over any reasonable period of time the value for shareholders that we believe can likely be achieved through a transaction with Gannett,” Oaktree said in the letter. “We see very substantial risk that through pursuing an independent course, Tribune will destroy enormous shareholder value.”

Tribune Publishing’s board rejected Gannett’s initial bid earlier this month and adopted a “poison pill” plan to block the offer.

In response, this week Gannett increased its offer to $15.00 per share from $12.25 per share -- a 22.5% increase. Tribune is in the process of reviewing the new offer.

Oaktree, which owns a 14.8% stake in Tribune Publishing, first made their position known May 4, when they publicly urged the board to engage in negotiations with Gannett.

“Our conclusion is that we are convinced that you and Tribune's management should engage Gannett immediately and seek to negotiate a transaction in the interest of all Tribune shareholders,” Oaktree said in its letter today to the board.

“We expect you to carry out the fiduciary duty that you owe to all shareholders, and believe that the only possible conclusion consistent with your fiduciary duty is to engage with Gannett with the objective of maximizing value to all Tribune shareholders.”

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