Newspaper chain Lee Enterprises, with a March 10 annual meeting looming, is urging shareholders to help it fight off a hostile takeover bid from Alden Global Capital.
In a letter on Monday, Lee’s board of directors told annual meeting participants to vote for its slate of director candidates, all are currently sitting and up for reelection. “Please vote for all three of our directors up for re-election — Chairman Mary Junck, CEO Kevin Mowbray and Lead Independent Director Herbert Moloney — to ensure Lee’s board remains fully loyal to you and all shareholders and does not become beholden to Alden,” the letter stated.
Alden made the hostile bid in November, offering to buy Lee for $24 per share — or $141 million — in cash. Since that offer was made, Lee’s stock surged. It was trading around $18 at the time of the Alden offer, and hit a high of $43.21 on January 11. It was trading around $35 on Wednesday morning.
In the letter to shareholders, Lee said the Alden offer “grossly undervalues Lee,” and represents a 33% discount on the Jan.21 closing price. “We believe Alden remains set on buying Lee at a deeply discounted price and taking Lee’s upside away from you and the rest of our shareholders,” the letter continued.
To advance its hostile bid, Alden sought to nominate three candidates to replace the members of the board’s executive committee. Lee responded that Alden’s nomination efforts didn’t follow Lee’s bylaws and rejected the candidates. That issue in now pending in court, with a trial expected early next month.
“The critical point is this,” the letter stated. “Lee’s shareholders should want our strong board leadership to remain in place to ensure any proposal from Alden (or others) is reviewed objectively with an eye on determining what is in the best interest of all our shareholders.”
“We now need your support to resist Alden’s efforts to replace Lee’s Board leaders with Alden’s favored candidates. We believe Alden is targeting our directors as the next step in their campaign to pressure the company into an unfair transaction that would secure Lee’s upside for Alden alone, at your expense.” the letter said.
Further, the letter stated, Lee is on a track for rapid growth and expanded profitability, and was the fastest-growing digital-subscription platform in the industry last year, with more than 65% year-over-year growth in digital subscriptions.
Lee owns 75 daily newspapers and over 350 weekly and specialty publications serving 77 markets in 26 states, including St. Louis; Buffalo, New York; Omaha, Nebraska; Richmond, Virginia; Lincoln, Nebraska; Madison, Wisconsin; Tucson, Arizona; and Davenport, Iowa, where it is based.