“The Gannett $15.00 per share proposal for all of Tribune is clearly inadequate as a control investment in Tribune and, as ISS has pointed out, our Board “has grounds to decline to engage” on Gannett’s proposal”, said CEO, Justin Dearborn.
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“The ideas we have heard appear to be preliminary and involve great execution risk”, John Frank, Oaktree’s vice chairman, said in the letter, a copy of which was filed with the Securities and Exchange Commission.
Tribune Publishing, the owner of the Los Angeles Times and Chicago Tribune, on Monday said that its board of directors has “thoroughly evaluated” a $864 million increased takeover offer by USA Today owner Gannett Co. and made a decision to reject it just like an earlier bid. Tribune Publishing’s board earlier this month rejected an unsolicited $12.25-a-share bid.
In Friday’s letter, McLean, Va. -based Gannett, publisher of USA Today and more than 100 other newspapers, discounted Tribune Publishing’s recently unveiled digital strategy as “unproven”, and questioned Ferro’s publishing track record, calling him an “ineffective operator” when he owned the Sun-Times.Tribune Publishing’s second-largest shareholder, Oaktree Capital Management, a Los Angeles-based investment firm that owns 14.8% of the company, sent a letter to the board Wednesday urging the company to negotiate a transaction with Gannett.
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The L.A. Times owner on Monday also unveiled a $70.5 million investment from Nant Capital, which makes Nant Tribune Publishing’s second-largest shareholder with a 12.9 percent stake.
In the letter, Frank said Oaktree has met with both Ferro and Gannett management, and the firm believes Gannett is better positioned to bring value to shareholders. Oaktree said that remaining independent could “destroy enormous shareholder value”.
The company sent a letter sent to shareholders asking that they abstain rather than support a slate of eight board nominees backed by Ferro to be considered at the company’s June 2 shareholder meeting in Chicago. Tribune has since received a revised unsolicited proposal from Gannett to acquire all outstanding shares of Tribune Publishing common stock for $15 per share.
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“We expect you to carry out the fiduciary duty that you owe to all shareholders, and believe that the only possible conclusion consistent with your fiduciary duty is to engage with Gannett with the objective of maximizing value to all Tribune shareholders”.
