Gannett has called a May 16 vote on MNG Enterprises/Digital First Media’s hostile takeover bid.
In a package sent to shareholders, Gannett is alleging that the hedge fund-backed media company actually wants Gannett to acquire them.
“We believe MNG is using its proposal as a ploy to open discussions for such a transaction. Given these facts, Gannett continues to question whether MNG is in fact a buyer or a seller,” the media giant said.
Gannett turned down a $12-per-share offer in January – a takeover bid worth $1.7 billion.
“Gannett’s Board is running on its track record of value destruction and declining profitability, and on a risky digital transformation plan that cannot compete with the immediate value that would be provided by MNG’s all-cash, premium proposal of $12 per share or any higher offer that may emerge,” MNG/Digital First said in a statement. “We believe our fellow Gannett shareholders deserve a board that is committed to running a full and fair process to maximize value now before further value is lost and any current premium is squandered and that is qualified to successfully run the business in the interim.”
Gannett owns eight daily newspapers in New Jersey: 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.
Since Gannett rejected the offer, the company has reported wider than expected losses for the fourth quarter of 2018. MNG says that Gannett has lost two-thirds of its free cash flow over the last four years. They said Gannett’s share price has declined 41% since a 2015 spinoff.
The (Bergen) Record has laid off six employees this year while their CEO’s compensation by has gone up 17% over the last four years to $8.7 million annually.
According to MNG, Gannett has spent about $350 million on digital media acquisitions while EBITDA has declined by 31% and cash flow by nearly 50%.
MNG/Digital First has launched a new website, SaveGannett.com, to provide information to shareholders seeking information on the proposed sale.
An independent analyst, J.P. Morgan, has called the MNG/Digital First offer “a potentially favorable exit for shareholders.”
Digital First Media owns more than 200 newspapers nationwide, including the Trentonian.
The Gannett newspapers in New Jersey have had a virtual blackout of news on the takeover bid, including no report of today’s news on their earnings and revenues.Gannett Letter to Shareholders - 3.26.19