MNG Enterprises, which has dramatically slashed head count at newspapers like the Boston Herald and the Denver Post, ramped up its bid to acquire USA Today publisher Gannett on Tuesday by urging shareholders to help it replace the company’s board.
MNG, controlled by hedge fund Alden Global Capital, proposed a slate of six candidates to Gannett’s eight-member board on Tuesday, arguing that this is the only way shareholders will see Gannett sell itself to them for $12 a share — a premium of 41 percent from the stock price prior to their January offer.
“Gannett has not presented a credible path to achieve a $12.00 per share valuation on its own for one simple reason – it cannot,” MNG said in proxy materials it sent to Gannett shareholders Tuesday. “Gannett is in serious trouble and needs to quickly address its operational and strategic issues if it is going to survive,” MNG said.
Gannett has rejected MNG’s offer, saying the “board does not believe that MNG’s proposal to acquire Gannett is credible.”
The owner of the nation’s largest newspaper chain is urging its shareholders to vote against the slate proposed by MNG and Alden, which owns a 7.5 stake in Gannett’s stock, making it the fifth largest shareholder.
Shareholders will put the issue to a rest on May 16 when it votes on Gannett’s board.
According to Gannett, MNG, which owns about 200 papers, has not secured financing for the $1.7 billion deal — or even reached out to potential financial partners.
Gannett submitted its own proxy materials last week, saying MNG is really looking to be taken over by Gannett — citing a Feb. 7 meeting that, it says, had MNG executives repeatedly expressing its interest in a “combination” or “merger” — not an all-cash takeover bid.
“We believe MNG is using its proposal as a ploy to open discussions for such a transaction. Given these facts, Gannett continues to question whether MNG is in fact a buyer or a seller,” Gannett said.
Gannett has also blasted MNG’s business model, including dramatic staff cuts and the sale of real estate holdings to pare down debt and reward Alden’s shareholders.
MNG reportedly had 15 percent profit margin in 2018, among the best in the industry — but only after steep cuts and real estate divestments.
When it took over the Boston Herald a year ago, it reduced staff by about 60 percent over the course of a year. The Denver Post newsroom staff today is down to about 70 people, following another 30-person cut earlier this year.
Those cuts prompted a Post editorial to label parent company Alden “vulture capitalists” and called on the hedge fund to sell the paper.
MNG is downsizing its Southern Newspaper Group, which includes the OC Register and 10 other papers, using voluntary buyouts.
Gannett, which is also cutting staff nationally, insists it is in the midst of a digital transformation that will offer stockholders more value in the long run.
But it has made plenty of its own cuts in places like the North Jersey News Group, which includes The (Bergen) Record and Herald News and dozens of weeklies that have cut over 500 since its $35 million takeover two years ago.