Carl Icahn Launches Proxy Battle At Gannett, Anticipating A Possible Takeover

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This is the kind of move that everyone’s been expecting activist investor Carl Icahn to make since August, when he bought a 6.6% stake in the TV, newspaper, and digital power — now in the process of creating separate companies for its TV and newspaper properties. He told Gannett, in a letter sent yesterday and disclosed today, that he will urge other shareholders to support resolutions barring the company from adopting anti-takeover measures, and to elect two of his allies to the board.

The owner of USA Today — and largest collections of CBS and NBC affiliates — calls the proposals “aggressive” and unwarranted. Its shares are up 1.5% in early trading.

Icahn says he wants to be sure that investors aren’t frozen out of major governance decisions after the planned TV-newspaper split. “I would not be surprised if either company became the target of a takeover attempt,” Icahn says in a letter to CEO Gracia Martore. “If this occurs, the shareholders — the true owner of the company — should have the full and only right to decide whether or not to accept the offer.”

He specifically wants to prevent Gannett and the spinoff company from adopting a so-called poison pill anti-takeover defense and having different classes of directors. In addition, he wants to allow the company charter to be changed with a majority vote of shareholders, and to hold special meetings if at least 10% want one. His two board candidates are former Bertelsmann Entertainment CEO Michael Dornemann and former Goldman Sachs Managing Director Courtney Mather who joined Icahn Capital last year.

Gannett non-executive Chairman Marge Magner said that she is “surprised by Mr. Icahn’s aggressive actions” to “force wholesale changes in Gannett’s corporate governance and dictate the corporate governance of a company whose governance profile has yet to be determined.” The plan will “advance his own agenda” while the board will “serve the interests of all of our shareholders.”

Martore added that Gannett shares have done well over the last three years. Ichan, she also noted, “publicly supported” the plan to split the company. Greenhill & Co is providing financial advice, and Wachtell, Lipton, Rosen & Katz is handling legal issues.


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