Street Journal reported hedge-fund-backed MNG Enterprises, or Digital First Media, submitted a proposal to Gannett, publisher of USA Today, in an attempt to scoop up its stable of titles.
Having acquired a 7.5% stake in the company, Digital First Media proposed a sale, stating in a letter to the board that Gannett’s management is incapable of running the company effectively. The letter cited Gannett’s 41% drop in value since it emerged as a public company over two years ago.
Digital First is offering $12 a share for Gannett, marking a 23% premium over its closing price of $9.75 as the market closed on Friday.
The media group, backed by hedge fund Alden Global Capital, asked that Gannett halt the acquisition of digital assets and enter into talks before hiring a new CEO, ahead of the pending departure of Robert Dickey.
Digital First Media is well-known for buying up papers, then consolidating resources and slashing staff in an effort to maximize revenue.
After it stripped The Denver Post’s stable of editors and writers, among other positions, the paper’s staff revolted, runnin g op-eds and articles calling out the nefarious practices of Digital First and asking the group to sell the paper if it wouldn’t properly fund it.
Should Gannett accept Digital First’s bid, the growing conglomerate would add USA Today and over 100 local papers, including The Detroit Free Press, The Tennessean, The Indianapolis Starand The Arizona Republic to its coffer.
Digital First Media owns around 200 newspapers and other publications, including the Boston Herald, which it won in a bankruptcy bidding war last year.
Gannett published public comment for shareholders today, stating: “Consistent with its fiduciary duties and in consultation with its financial and legal advisors, the Gannett board of directors will carefully review the proposal received to determine the course of action that it believes is in the best interest of the company and Gannett shareholders. No action needs to be taken by Gannett shareholders at this point.”
Dickey sent out a similar internal memo to Gannett’s staff.