Gannett says that the company mounting a hostile takeover refused to offer details about its ability to finance a $1.8 billion deal.
The owner of eight daily newspapers in New Jersey, Gannett also says that some of the candidates for board of directors nominated last week by MNG Enterprises, known as Digital First Media, may not be legally eligible to serve.
MNG would invest no new equity and would rely only on debt refinancing, Gannett said, noting that the company has not secured financing for the transaction.
According to Gannett, MNG would only offer “vague assurances” that antitrust regulatory issues or pension liabilities are not a concern.
“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,” said J. Jeffry Louis, the Gannett chairman. “Instead, MNG offered vague and generic statements that further confirmed the board’s decision to reject MNG’s proposal.”
Since all six director candidates are affiliated with MNG or Alden Global Capital, the New York hedge fund that is their majority shareholder, Gannett claims they could not satisfy their fiduciary responsibilities to Gannett shareholders if elected.
Gannett alleges that anti-trust laws could invalidate the candidacies of three members of the slate, and said that MNG chairman R. Joseph Fuchs, 78, is beyond Gannett’s mandatory retirement age.
“MNG’s credibility was further undermined by its decision to nominate six director candidates, all of whom are affiliated with MNG and/or its majority shareholder Alden Global Capital, to stand for election to Gannett’s board. 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,” Louis said.
MNG/Digital First Media presented an unsolicited offer of $12 per share in cash on January 14, which Gannett rejected on February 4.
Gannett owns a national chain of newspapers, including eight New Jersey dailies: The (Bergen) Record, the Asbury Park Press, the Courier News, the Courier-Post, the Home News Tribune, the Daily Record, the Daily Journal, and the Herald News.
Digital First Media has a history of purchasing struggling newspapers and cutting costs by dramatically reducing the number of journalists.
The company says said Gannett has lost a significant amount of its value, its leadership doesn’t have a credible plan to restore that value and it is trying to block a premium deal. It added that it has no impediments to completing the transaction. Gannett’s stock dropped 26% in 2018.
Since Gannett confirmed the takeover plan, The Record has laid off six more employees.
None of the New Jersey Gannett newspapers have acknowledged the proposed sale to their readers.
Digital First Media owns the Trentonian.
The date of the shareholder meeting has not yet been set.