Gannett is going negative their campaign to stop a hostile takeover bid.
In a mailing to shareholders in advance of the May 16 vote, Gannett is accusing the slate of board of directors candidates proposed by MNG/Digital First Media of having “irreconcilable conflicts of interest.”
The newspaper chain, which owns eight daily newspapers in New Jersey, alleges that director candidate Dana Goldsmith Needleman is too close to Heath Freeman, a Short Hills native who heads Alden Global Capital, the hedge fund that owns MNG/DFM.
“Ms. Needleman is a family friend of Mr. Freeman, and they have seemingly known each other for years prior to Ms. Needleman being hand-picked to serve on the Fred’s board, including through business dealings, charitable organizations, a shared alma mater and documented social gatherings,” the Gannett mailing says. “Indeed, Ms. Needleman’s spouse has also represented Alden in real estate dealings, and Ms. Needleman has made a sizeable personal donation to one of their alma mater’s organizations on which Mr. Freeman is chairman of the advisory board.”
Gannett maintains that all five director candidates are in some way tied to Freeman.
“Shareholders should ask: could such nominees objectively evaluate and advise on the actions the board takes on behalf of all Gannett shareholders or would they be beholden to MNG and Alden?” Gannett argues. “Considering the irreconcilable conflicts of interest of MNG’s candidates, Gannett believes electing them to the board would essentially transfer control of the board to MNG and Alden – with no control premium – enabling MNG to advance any agenda it wants at Gannett shareholders’ expense.”
The main argument by Gannett is that MNG/DFM and Alden “have a history of value destruction”
After Freeman led the deal to purchase of the Boston Herald last year, about 140 of the 240 newspaper employees were let go.
Last week, the Fred’s discount chain controlled by Alden announced that they would close 159 of its 557 stores. Freeman is the chairman of Fred’s, and three other Gannett director candidates – Steven Rossi, Timothy Barton and Goldsmith Needleman – also serve on the Fred’s board.
Gannett also made a pitch for the election of their own slate of candidates.
“All eight of your board’s nominees are highly qualified and independent – and committed to acting in your best interests,” they said.Gannett Letter to Shareholders - 4.17.19