Tribune Publishing Co, the owner of the Los Angeles Times and the Chicago Tribune, said billionaire Patrick Soon-Shiong invested $70.5 million in the company, becoming its second largest shareholder.
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Tribune also rejected Gannett Co Inc's latest takeover offer, but said on Monday that it would allow the publisher of USA Today access to some confidential corporate information.
Los Angeles-based Soon-Shiong, through his fund Nant Capital LLC, will hold about 12.9 percent in Tribune and join the publisher's board as vice chairman on June 2.
Tribune's shares fell as much as 21.5 percent in morning trading.
Soon-Shiong, a South African-born surgeon, is part-owner of the Los Angeles Lakers basketball team and a founder of two drug companies, which he sold for a total of $8.6 billion.
Tribune rejected Gannett's $15 per share cash offer, raised last week from $12.25 per share, saying it was not in the best interests of shareholders.
Gannett said it would consider whether to proceed with the offer, valued at $864 million including debt. Tribune's non-disclosure agreement "would require Gannett to effectively cease any public proxy solicitation or other public pursuit of a transaction," Gannett said in a statement.
Nant Capital has also entered into a standstill agreement with Tribune, limiting its ability to raise stake in the publisher.
Soon-Shiong, who is also the chief executive of biotech company NantKWest Inc <NK.O>, is one of the highest paid CEOs in America. He took NantKWest public in June last year.
Reuters, citing sources, reported on Sunday that Tribune was planning to reject Gannett's offer.
Oaktree Capital Management LP, a major shareholder of Tribune, urged the company to form an independent board to consider the proposal, according to a filing. (http://bit.ly/22lAILv)
Oaktree owned about 4.7 million shares of Tribune, or 14.8 percent stake, as of May 20, according to Thomson Reuters data.
Tribune said it had determined that a committee was not "appropriate or necessary."
The company's shares were down 18.9 percent at $11.54.
(Reporting by Narottam Medhora in Bengaluru; Editing by Kirti Pandey)