Tag: Gannett

Gannett Co. leaders said they remain skeptical of MNG Enterprises’ $1.8 billion offer to buy the newspaper company after a meeting late last week.

MNG made an unsolicited offer to buy Gannett, the corporate owner of The Commercial Appeal, last month for $12 per share, or $1.8 billion. Gannett leaders said they first learned of the offer in a story in The Wall Street Journal. Gannett leaders rejected the offer a week ago, claiming MNG failed to provide details on financing the deal, antitrust issues, and more.

MNG, a company also known as Digital First, is owned largely by a New York hedge fund, Alden Global Capital. Digital First operates The Boston Herald and The Denver Post, according to USA Today. MNG owns a 7.5 percent stake in Gannett. 

Leaders from both companies met on Thursday, according to a news release from Gannett Monday morning, to hammer out details. But the information given in that meeting was “deficient” and did not convince Gannett leaders, the newspaper company said.

“We are disappointed that at the meeting on February 7, MNG again failed to provide substantive answers to the basic questions Gannett has repeatedly raised,” Jeffrey Louis, Gannett’s board chairman, said in a statement. “Instead, MNG offered vague and generic statements that further confirmed the board’s decision to reject MNG’s proposal.”

Here are some details from the meeting, according to Gannett:

• MNG said it would fund the deal with debt financing.

• MNG had not secured the financing, nor had it contacted potential financing sources.

• MNG offered ”vague assurances” and said that it is not concerned about antitrust issues.

• MNG said the transaction would be a merger, “not the acquisition proposal that MNG had previously put forth.”

“Despite being afforded every opportunity to provide Gannett with specifics related to these important matters, [R. Joseph Fuchs, executive chairman of MNG] refused to provide any substantive, actionable evidence of a credible proposal,” reads a Gannett statement.

POSSIBLE HOSTILE TAKEOVER

During a break in these talks, MNG told Gannett leaders that the company intends to nominate six MNG-affiliated candidates to Gannett’s board of directors during the next shareholder meeting. That board will shrink to nine members during that meeting. Filling the board with MNG candidates could amount to a hostile takeover of the company.

“Gannett believes MNG’s clearly conflicted nominees are not in a position to fairly, and in a disinterested way, evaluate and advise Gannett shareholders on MNG’s proposed transaction,” reads a Gannett news release.

Three of the MNG candidates my not be legally capable of serving on the Gannett board, Gannett said, given their roles at MNG. Another, the 78-year-old Fuchs, exceeds Gannett’s mandatory retirement age for board members.

”MNG’s acknowledgement that these nominations are indeed intended to advance its efforts to acquire Gannett further underscores the proposed nominees’ clear and irreconcilable conflicts of interest and inability to satisfy fiduciary responsibilities to all Gannett shareholders,” said Louis.

Justin Fox Burks

Gannett Co.’s board of directors unanimously rejected MNG Enterprises’ offer to buy the company, calling the proposal “not credible” and saying it undervalued Gannett.

MNG proposed buying the newspaper company, owner of The Commercial Appeal, earlier this month, in an unsolicited deal worth $12 per share. The move left many to worry that the company would lay off even more staff at Gannett papers to drive profitability.

But Gannett board chairman Jeffry Louis said the board is optimistic about the company’s future and its digital strategy.

“Our board of directors is confident that Gannett has significant value creation potential,” Louis said in a statement. “Our vision and pursuit of our digital transformation, combined with our USA Today Network strategy, enables us to serve more directly and efficiently the persistent demand of our audiences and customers to engage with their communities.

“We believe that our future — and that of the industry — turns on thoughtful investments in journalism and marketing solutions, so we can deliver engagement when, where, and how our audiences and customers demand it. Delivering on this purpose will deliver value to our shareholders and benefit the communities we serve.”

“We know there are challenges that face us and our industry. We firmly believe, however, that given our operational expertise, our focus on evolving our business model, and our unwavering commitment to remaining a trusted source of news, we are uniquely positioned to grow this company and its valuable assets.”
[pullquote-1] A news release from Gannett early Monday morning provided some interesting details of the deal proposed by MNG. The company’s actions — before and since its public proposal — “suggest that MNG’s proposal is not credible,” according to Gannett.

MNG did not talk to Gannett officials before a story of the offer appeared in The Wall Street Journal. Gannett received a letter from MNG a day after the story ran, even though “MNG and Gannett management are well known to one another and in fact are partners in significant operations.”

MNG did not give Gannett any information on how it would finance the deal and “failed to address potential regulatory risks and other fundamental issues that Gannett considered important.” Gannett leaders did meet with MNG officials but left with unanswered questions.

“Gannett posed questions to MNG that are routinely addressed by someone making a credible, public, unsolicited takeover proposal: Can MNG fund it? Can MNG close it?” according to Gannett.
[pullquote-2] Without the information, Gannett leaders said they felt uncomfortable signing a non-disclosure agreement with MNG. Gannett said they asked for written responses to questions that would not have required MNG to disclose confidential information. But MNG would not give them any more information about how it would execute the deal.

“In light of this, Gannett now questions MNG’s motives and can only conclude that the proposed nondisclosure agreement is a distraction designed to mask MNG’s inability to finance and complete the proposed transaction,” reads Gannett’s news release. “Indeed, given MNG’s refusal to provide even the most basic answers to Gannett’s questions, it appears that MNG does not have a realistic plan to acquire Gannett.”