The board of Tribune Publishing Co. — or soon to be Tronc — faces yet another shareholder lawsuit that’s seeking class-action status in Delaware court.
A complaint filed this week in the Delaware Court of Chancery by the Monroe County Employees Retirement System against the 11-member board and investor Nant Capital LLC alleges breach of fiduciary duty as it relates to the continued attempts by USA Today parent Gannett Co. Inc. to acquire Tribune.
This is the second shareholder lawsuit filed against the Tribune board this month. The first came from Capital Structures Realty Advisors LLC and was also filed in Delaware and alleges breach of fiduciary duty and aims to stop a deal announced last month involving the infusion of $70.5 million into Tribune from Nant Capital in exchange for 4.7 million shares of company stock and a seat on the board for Nant founder Patrick Soon-Shiong.
The latest lawsuit claims Gannett’s offer of $12.25 per share, or $815 million, made in April was left to sit in what was seen by Gannett as stalling on the part of Tribune. The lack of activity, according to the complaint, is what prompted Gannett to go public with its initial offer. Gannett later increased its bid to $864 million, or $15 per share, and called for shareholders to withhold their votes on the slate of directors during last week’s Tribune annual shareholder meeting.
The results of the votes cast showed majority support for the full roster of directors. The vote, had it gone in Gannett’s favor, would have been a symbolic message to the Tribune board that shareholders supported a possible merger. Gannett has since made it clear it’s not backing down from a deal.
“Tribune Publishing just received a copy of the complaint and is reviewing it carefully,” a statement from a company spokeswoman said. “The stock sales to [Tribune chairman Michael Ferro’s] Merrick Media and Nant Capital were approved by the board and will provide valuable growth capital to allow the company to execute on its new value-creating business plan. In addition, the suggestion that the board has failed to consider the Gannett proposal is simply incorrect.”
Tribune has maintained that the offer price did not correctly value the company and also believes it has the ability to grow assets such as the Los Angeles Times with a digital strategy. The company said this month it intended to effect a re-brand June 20 to Tronc, which stands for Tribune online content, as it focuses on digital and interactive content. The company’s stock will also move from the New York Stock Exchange to the Nasdaq Global Select Market with that name change, trading under the ticker TRNC.