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.