Tribune Publishing on Monday rejected a sweetened takeover offer from Gannett, insisting its turnaround plan is better than Gannett's bid, and said a billionaire entrepreneur would take a $70 million stake in the company.
Tribune Publishing Chief Executive Justin Dearborn said Gannett's offer of $15 a share " is clearly inadequate as a control investment in Tribune." A representative from Gannett couldn't immediately be reached for comment.
Also on Monday, Tribune Publishing said it would receive a $70.5 million growth-capital investment from Nant Capital LLC, which was founded by Patrick Soon-Shiong, in exchange for Tribune common stock.
Mr. Dearborn said the investment "demonstrates strong support for our plan and provides additional capital to accelerate our growth strategies for the benefit of our shareholders and all other Tribune stakeholders."
Following the transaction, Nant Capital will own about 12.9% of Tribune Publishing's shares outstanding, making it Tribune's second-largest shareholder.
Dr. Soon-Shiong has been invited to join the company's board as a vice chairman. He will begin serving on June 2 -- the day of the company's annual shareholder meeting.
Tribune on Monday did note it had invited Gannett to an agreement under which the companies could engage in discussions to assess whether a transaction in the best interests of Tribune and Gannett shareholders. That move comes as Gannett has signaled it could abandon its bid to acquire Tribune if not enough Tribune shareholders indicate support for a tie-up.
Gannett raised its unsolicited offer on May 16 to $15 a share, double the price at which Tribune shares were trading before Gannett's initial offer was made public. On May 4, Tribune's board unanimously rejected the initial $12.25-a-share bid, which it said undervalued the company.
A merger of the two companies would tie household news outlets such as Gannett's USA Today and Tribune's Los Angeles Times under one firm, as newspaper companies have struggled in recent years in part from disruptions caused by the Internet.
Gannett has asked Tribune shareholders to withhold their votes for the company's board at the annual meeting on June 2, as a way to send a message to the Tribune board that it is not acting in the best interest of investors. Meanwhile, Oaktree Capital Management, Tribune's second-largest shareholder, has urged the board to engage in talks, saying it had little confidence the company's new management team can achieve value equivalent to the Gannett deal. Gannett has signaled it could abandon its proposal if not enough Tribune shareholders indicate their support.
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