WASHINGTON – Five days after boosting its unsolicited takeover bid for Tribune Publishing Co., USA Today owner Gannett is urging Tribune shareholders to reject the company’s slate of board nominees.
In a letter Friday that disparaged Michael W. Ferro Jr., the publisher’s non-executive chairman, Gannett criticized the Tribune’s decision to adopt a “poison pill” to avert a buyout.
“Gannett believes the Tribune board operates with significant corporate governance deficiencies,” it wrote.
In February, Ferro gave Tribune a $44.4 million cash infusion through his company Merrick Media. Tribune’s board sold control of the company to Ferro at a discount, the letter said, and Ferro then led the board to take actions that gave him excessive control, compromising its independence, Gannett charged.
At least four of the eight director nominees have significant ties to Ferro, who has “an unproven track record” in the publishing industry,” Gannett said.
It also said that in a May 12 meeting, Ferro told Gannett that an acquisition would make sense, “as long as Mr. Ferro would have a ‘significant role’ at the company post-closing and was its “largest shareholder.”
The Tribune didn’t immediately return a request for comment Friday.
Gannett said that Tribune’s board “is disregarding your interests by preventing you from realizing superior and certain cash value for your shares.” It asked investors to withhold their votes for Tribune’s eight director nominees on proxy cards mailed in advance of Tribune’s annual meeting on June 2.
Gannett on Monday raised its bid to $15 per Tribune share from $12.25 offered earlier for the owner of the Los Angeles Times, Chicago Tribune and other newspapers, after Tribune adopted a “poison pill” plan. Chicago’s Tribune rejected the original offer as too low, and said that it is reviewing the revised proposal.
Gannett, based in McLean, Virginia, puts the total value of the revised offer at around $864 million, which includes assuming certain Tribune liabilities, such as some $385 million in outstanding debt.
On Thursday, Gannett’s President and CEO Robert Dickey downplayed as rumours recent reports that Ferro is preparing a counter bid to acquire Gannett. In a letter to Gannett employees, Dickey said the board, management and advisers “continue to focus on taking the right steps for Gannett” and are committed to the $15-a-share offer for Tribune despite its unwillingness to negotiate.
“We know that a number of Tribune’s shareholders support our offer,” he wrote.