Gannett Co. Inc. has filed preliminary proxy materials with the U.S. Securities and Exchange Commission disclosing its plan to seek “withhold” votes in connection with Tribune Publishing Co.’s 2016 annual meeting of shareholders to be held June 2.
Gannett, the publisher of USA Today, intends to solicit “withhold” votes in connection with the election of all eight nominees to the Tribune board of directors as a referendum that the Tribune board should substantively engage immediately with Gannett regarding its proposal to acquire Tribune for $12.25 a share in cash. Gannett has also submitted a request for Tribune’s shareholder records under Section 220 of the Delaware General Corporation Law to enable Gannett to communicate with Tribune shareholders about the solicitation.
“We intend to give Tribune stockholders the opportunity to send a clear message to the Tribune board that its lack of engagement with our board and management team regarding our highly compelling, premium offer for $12.25 per share in cash is unacceptable,” said Robert Dickey, chief executive officer of Gannett. “We remain ready to work constructively with the Tribune board and management to negotiate a definitive merger agreement and quickly complete a transaction that would provide significant value to both companies’ stockholders.”
Gannett’s $12.25 a share all-cash proposal to acquire Tribune represents a 63 percent premium to Tribune’s closing stock price on April 22, the day before announcing the proposal, a 58 percent premium to the volume weighted average trading price over the 90 days as of April 22, and a multiple of 5.6x Tribune’s estimated 2016 earnings before interest, taxes, depreciation and amortization. The $12.25 a share offer price also represents a significant premium to the $8.50 share price at which Tribune recently issued common shares to Tribune chairman Michael Ferro.
According to a Tribune spokeswoman, “As we said previously, our board has engaged financial and legal advisors to review the Gannett proposal, and the board will announce the results of its evaluation of the Gannett proposal as soon as feasible. Gannett’s campaign to suggest that our board has not taken its proposal with due seriousness is misleading and disingenuous. The facts belie their public statements. This latest ploy to encourage Tribune Publishing shareholders to withhold their votes at the 2016 annual meeting is a distraction from the real issue, which is whether the Gannett proposal is in the best interest of the Tribune shareholders. We regularly engage with all of our shareholders, including our largest shareholders who own over 40 percent of the company, and we are confident that the nominees to the board, who are unopposed, will earn the plurality of votes necessary to be elected.
“Gannett has no path to control for Tribune Publishing and their tactics clearly demonstrate a desperate and opportunistic attempt to steal the company. This desperation indicates they have very limited strategic options for their own business and are attempting to exploit the current valuation of Tribune Publishing’s unrivaled collection of award-winning brands in important markets. We look forward to sharing our strategy and the various possibilities for our business on our earnings call this Wednesday, May 4,” she said.