Tribune Publishing Co said on Wednesday its board unanimously rejected Gannett Co Inc's unsolicited takeover offer and will proceed instead with a strategic plan to revive its print business and tap growth in digital content.
Tribune shares fell by more than 4 percent after closing at $11.02 and Gannett's stock dropped about 13 percent after closing at $16.27, in after-market trading.
Last month, Gannett, the owner of USA Today, made a takeover bid for Tribune at $12.25 per share in cash, in a deal worth roughly $815 million.. Tribune owns the Los Angeles Times and Chicago Tribune newspapers, as well as metro dailies like the Orlando Sentinel.
In a letter on Wednesday, Tribune told Gannett's management that its board had reviewed the bid and decided that "the price reflected in the proposal understates the company's true value and is not in the best interests of our shareholders." It does not warrant "further discussion," the company said in a statement.
Tribune's rejection of Gannett's proposal, comes as the newspaper industry tackles declining circulation, high costs, shrinking advertising dollars and a broad shift toward digital content, leaving publishers rushing to consolidate or find new avenues of growth.
Gannett, in response, said in a statement on Wednesday it was committed to pursuing a deal and "intends to solicit withhold votes in order to advance shareholders."
In a statement on Monday, Gannett Chief Executive Robert Dickey urged Tribune shareholders to withhold their votes for board nominees during Tribune's June 2 annual meeting and send a "clear message" to Tribune's board to engage seriously.
Gannett has been on a mission to buy rivals to create a more efficient company by expanding its footprint into more cities.
"Gannett is best positioned to advance Tribune's publications and journalism as Gannett's strategy to grow the USA TODAY NETWORK would seamlessly extend to Tribune," Dickey said in Gannett's statement.
Tribune Publishing said its board believes that its new plan, which includes driving revenue from content brands, growing the Los Angeles Times as a global brand and embracing a digital strategy will "generate shareholder value in excess of Gannett's opportunistic proposal."
Gannett's claims that its offer was not taken seriously by Tribune are "misleading," Tribune Chief Executive Justin Dearborn said on an earnings call with analysts on Wednesday.
Gannett said in its statement that Tribune's board continues to deny it access to due diligence that could help to improve its offer. (Reporting by Malathi Nayak; Editing by Leslie Adler and Sandra Maler)