Undeterred by chairman Michael Ferro’s intransigence (and undaunted by the weird name he chose for the company), Gannett Co. remains determined to acquire Tronc Inc., formerly known as Tribune Publishing, which owns the Chicago Tribune and Los Angeles Times, among other big metro daily newspapers.
This week, Gannett raised its bid once again, according to The Wall Street Journal, although the exact dollar figure for the new offer hasn’t been disclosed.
Gannett originally bid $12.25 per share for Gannett back in May, an offer that was swiftly dismissed by Ferro and the Tribune board. It then raised its bid to $15 per share, for a total price of $864 million when $390 million of Tribune debt were included.
Assuming the latest bid is substantially higher than Tronc’s current share price of $15.28, the total value of Gannett’s latest offer could be around $1 billion, again factoring in Tribune’s debt.
The nation’s largest newspaper publisher, Gannett is said to be interested in expanding the distribution of its USA Today-branded newspaper supplement to Tronc’s mid-sized publications, including the Baltimore Sun and Orlando Sentinel.
This would allow the merged company to save costs on national reporting, as well as production and distribution.
Tronc previously adopted a “poison pill” defense to fend off Gannett’s original bids, supposedly in protection of shareholder rights. In this scenario, the company would offer additional preferred shares to existing shareholders at a discount if any entity tried to acquire more than 20% of the company.In response, Gannett urged Tronc’s sharehoholders to withhold their votes as a sign of disagreement with Ferro’s strategy during the company’s board elections this spring. Around 40% of shareholders did so.
One of Tronc’s institutional shareholders, Oaktree Capital Management, has been especially vocal in urging the company to seriously consider the Gannett offer, going so far as to write an open letter casting doubt on Ferro’s plans to reinvent the company.
Another of Tribune’s shareholders, Capital Structures Realty Advisors, is suing Tribune’s management for breach of fiduciary duty in rejecting the $15-per-share offer from Gannett, then selling 4.7 million shares to Nant Capital, an investment vehicle owned by tech billionaire Patrick Soon-Shiong, for the same price.