Shares in Gannett have soared 18% on the news, reaching $11.50 in morning trading.
The management of Gannett indicated it will consider the offer at the board level, but the offer letter did not mince words, saying that Digital First believed that Gannett’s leadership has failed to show it can run the company effectively. Digital First has garnered a reputation for being aggressive, clashing in recent years with unions and staffers in Denver after buying the city’s lone surviving daily, the Denver Post.
Digital First in 2016 acquired the Orange County Register and other Southern California newspapers during the bankruptcy of Freedom Communications. Tribune Publishing had actually made the winning bid but was blocked from closing the deal by the U.S. Department of Justice Department, which objected because Tribune also then owned the Los Angeles Times and would have become a monopoly.
Virginia-based Gannett owns USA Today and dozens of other papers and has itself gained a reputation for being both acquisitive and cost-conscious. In 2015, the company’s local TV stations split off into a separate entity, Tegna. It last made M&A headlines in 2016 when it went after Tribune Publishing, which was then known as Tronc.
The backdrop of the current takeover fight is the increasingly grim newspaper business. As readers continue to migrate online and find news elsewhere combined print and digital circulation for U.S. newspapers fell 11% to 31 million in 2017, according to the Pew Research Center. That subscription total is about half what it was a generation ago.