Updated with Tribune Publishing response: Gannett apparently still believes that Tribune Publishing’s shareholders can pressure it to make a deal — even after the company adopted a poison pill takeover defense. The owner of USA Today this morning raised its offer for the owner of the Los Angeles Times by 22.5% to $15 a share, equal to $864 million including debt.
The new offer is a 30.9% premium over Tribune’s closing price on Friday, and up 99.5% vs its price before April 25, when Gannett disclosed its initial bid.
The news lifted Tribune shares more than 19% in early trading, suggesting that investors believe something will happen.
“It is evident from our discussions with Tribune shareholders that there is overwhelming support for the companies to engage immediately regarding our proposed transaction,” says Gannett Chairman John Jeffry Louis. The company wants Tribune holders to withhold their votes for directors at its June 2 annual meeting to demonstrate that they want the board to negotiate with Gannett.
Tribune’s No. 2 shareholder, Oaktree Capital, has said that it wants the publisher to talk to Gannett.
Tribune confirmed this morning that it received the offer and says it will “thoroughly review” the new terms.
Before this morning, Tribune said its shareholders will fare even better if they give its new management time to pursue a growth plan. CEO Justin Dearborn’s strategy would accelerate digital initiatives, expand the Los Angeles Times overseas, and develop a new endeavor — called Tronc — that would pool Tribune resources.
These plans would “more than offset revenue pressure in the traditional publishing business,” Tribune said last week. It added that it has “a clear vision … innovative technologies as well as the experience necessary to execute that strategy.”
The company also says Gannett is taking advantage of a dip in Tribune’s stock due to “the elimination of the dividend and disclosure of a material accounting weakness.”
Gannett CEO Robert Dickey says today that by “not engaging constructively with Gannett and continuing to pursue an unproven strategy based on its Tronc platform, we believe Tribune is jeopardizing its shareholders’ investment and disregarding their best interests.”