So much for the idea that Tribune Publishing execs would be cheered by the 63% premium in Gannett’s $815 million (including debt) buyout offer yesterday.
In a letter to Gannett, sent yesterday but disclosed this morning, Tribune CEO Justin Dearborn accused the owner of USA Today of “playing games,” engaging in “erratic and unreliable” behavior, and taking an “aggressive and hostile approach” with its bid.
After describing his contacts with Gannett leading up to its public announcement yesterday of its $12.25-a-share offer, Dearborn said that Tribune plans to “expeditiously” review it “in a manner that enables the Board to fully assess your proposal.”
Gannett CEO Robert Dickey responded today that it’s “not constructive to address the inaccuracies” in Dearborn’s letter. But he adds that he’s still “eager to negotiate a transaction with Tribune” and pressed his counterpart to say “when and where you would like to meet.”
Tribune’s properties include the Los Angeles Times, Chicago Tribune, Baltimore Sun, and Hartford Courant. Its shares, which soared nearly 53% yesterday, are up less than 1% in mid-day trading. Gannett is down 1.9% after a 6.5% rise yesterday.
Tribune’s leaders could face multiple lawsuits for violating their fiduciary responsibility to investors if shareholders believe that the company stiff-armed a potentially lucrative buyout offer.
Dearborn’s letter appears designed to demonstrate that he put their interests first by going to what he describes as “great lengths” to respond to Gannett after it privately made its offer in an April 12 letter.
The companies “had multiple discussions… regarding our plans for next steps,” he says.
The CEO accused Gannett of cancelling an April 16 dinner in Washington, D.C. “without offering a reason.” Tribune sent a letter on Friday saying that it was still “finalizing” arrangements to hire Goldman, Sachs & Co. and Lazard to provide financial advice, and Kirkland & Ellis to be its legal advisor.
Since then, he “personally engaged” with Dickey “numerous times both in writing and via phone” and “made every effort to establish open lines of communication and maintain a constructive dialogue.”
The Tribune chief charged that Dickey sent a letter on Sunday demanding that the board provide “a substantive response.” to the offer “within 90 minutes.” Dearborn responded that he would meet “promptly following our first quarter earnings call on May 4.”
Dickey says, in his letter, that from the start “all we have asked for is a substantive response to our proposal.”
Although he declined to offer a point-by-point rebuttal, he said the charge that Gannett had cancelled a dinner meeting in D.C. to discuss the offer “can’t go without comment.”
That dinner “would have been attended by a member of the Tribune team who had not been made aware of our offer, so no substantive discussion could have taken place,” Dickey says. Gannett cancelled because it had just closed its acquisition of Journal Media Group and scheduled a dinner to welcome its publishers.
“Tribune was well aware of Gannett’s reason for cancelling the dinner” and Tribune’s largest shareholder, Michael Ferro, “commented to me that he would have done the same thing if he had been in Gannett’s position,” Dickey says.
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