Tribune Publishing Co. has adopted a limited duration shareholder rights plan, commonly referred to as a “poison pill,” in response to a recently rejected, unsolicited acquisition proposal from Gannett Co., the publisher announced on Monday.
Under the plan, Tribune’s shareholders can double their holdings in the event that another party, such as Gannett, acquires more than 20 percent of the company.
“Based on Gannett’s approach and continued hostility, the Board is taking prudent measures to protect our shareholders’ best interests. The rights plan ensures shareholders receive fair treatment and protection in connection with any proposal to acquire Tribune Publishing and retain the opportunity to realize the value of their investment in the Company,” Tribune CEO Justin Dearborn said. “Our Board is unanimous that Gannett will not succeed with its current tactics and low ball price.”
Tribune chairman Michael Ferro said, “Tribune’s assets and brands, including the Los Angeles Times and the Chicago Tribune, are worth far more than Gannett’s proposal, which is a non-starter.”
Gannett responded with the following statement: “It is unfortunate that instead of engaging with Gannett to negotiate a mutually agreeable transaction that is in the best interests of all Tribune stockholders, Tribune is putting up another roadblock to prevent its stockholders from realizing compelling, immediate and certain cash value for their investment. The decision to implement a poison pill is yet another demonstration that Tribune’s board and management team are not listening to its stockholders. Gannett continues to believe in the strength of its $12.25 per share all-cash proposal and its ability to advance Tribune’s publications and journalism as part of Gannett’s USA Today Network.”
The rights will be exercisable 10 days from the public announcement that a person or group has acquired 20 percent or more of Tribune’s stock or has commenced a tender offer that would result in the ownership of 20 percent or more of Tribune’s stock.
Should that happen, each rights holder, other than the person triggering the rights, will be entitled to receive a commensurate number of shares of the company’s stock having a market value of two times the exercise price of the right.
The rights plan will expire in one year, and further details will be contained in a filing with the Securities and Exchange Commission today.
Tribune announced last week that its board had unanimously rejected an $815 million acquisition offer from Gannett, saying in a letter that the offer “understates the company’s true value and is not in the best interests of its shareholders.”