Gannett's Letter To Tribune Shareholders Seek Withholding Of Votes On Director Nominations

Gannett Co Inc GCI has urged Tribune Publishing Co TPUB shareholders to withhold votes for all eight Director Nominations on the Gold proxy card. The company sent a letter to all the shareholders reiterating its commitment to the transaction.

Gannett letters comes on the heels of the company sweetening its offer price to $15.00 a share a few days back from $12.50 a share to acquire Tribune Publishing. The company believes it was the duty of the Tribune board to engage in negotiations immediately as its offer price carried a premium of 99 percent before the news of the proposal broke out.

Apart from stressing the compelling value of its offer, its letter pointed out significant corporate governance deficiencies that it believes were endemic to Tribune's Board, as well as compromise the Tribune Board's ability to objectively evaluate Gannett's offer. The letter said that by continuing to pursue an unproven tactic rather than engaging constructively with Gannett, the company believes the Tribune Board was jeopardizing Tribune stockholders' investment. Its letter highlighted Tribune's chairman, Michael Ferro, offers to extend support to Gannett's offer only if he would have a significant role in the post-closing or merged entity.

Gannet letter to the shareholders said, "Gannett believes that the Tribune Board's conduct is rooted in significant corporate governance deficiencies that were exacerbated when the Tribune Board sold control of Tribune to Mr. Ferro at a discount. In February 2016, Tribune sold approximately 16 percent of Tribune's common stock to an entity controlled by Mr. Ferro for $8.50 per share. The $8.50 per share price represented a discount of $0.50 or six percent from Tribune's closing stock price on February 3, 2016, the day prior to the announcement of Mr. Ferro's investment. Mr. Ferro, Tribune's newly crowned chairman, then led the Tribune Board in taking a series of steps that we believe have conveyed disproportionate control to Mr. Ferro. We've outlined the significant deterioration in Board independence on side A of the accompanying enclosure."

Its letter further stated, "We believe the Tribune Board is disregarding your interests by preventing you from realizing superior and certain cash value for your shares. The Tribune Board:

Rejected Gannett's initial offer outright, without entering into substantive discussions, making a counteroffer or otherwise engaging with Gannett, even though Gannett's initial offer represented a significant premium to Tribune's unaffected stock price and far exceeded the $8.50 per share price at which Tribune recently issued common shares to an entity controlled by Michael Ferro;

Implemented a "poison pill" that provides yet another roadblock to stockholders realizing superior and certain cash value for their investment."