Gannett Co., the owner of USA Today, rejected a takeover bid of $254 million more than the newspaper chain’s market price as too low.
The offer of almost $1.36 billion from Digital First Media undervalues Gannett and isn’t in the best interests of its shareholders, the McLean, Va.-based company said in a statement. Gannett was worth about $1.1 billion, based on a share price of $9.75, the day before Digital First made its Jan. 14 proposal.
“Our board of directors is confident that Gannett has significant value creation potential,”said J. Jeffry Louis, chairman of Gannett’s board. “We know there are challenges that face us and our industry. We firmly believe, however, that given our operational expertise, our focus on evolving our business model, and our unwavering commitment to remaining a trusted source of news, we are uniquely positioned to grow this company and its valuable assets.”
Digital First, which holds a 7.5 percent stake in Gannett, blasted the board’s decision as an irresponsible bet on a “speculative future engineered by the team that already has destroyed” a substantial amount of the newspaper company’s value.
“Gannett’s long-suffering shareholders cannot afford to wait any longer,” the would-be buyer added. “The only responsible course is for Gannett to engage in a genuine pursuit to maximize value.”
The company’s revenue has declined about 9 percent over the past five years, dipping to $3.02 billion in the 12 months through September 2018, as the newspaper industry struggles with the loss of advertisers who can promote their products more effectively, and for less money, online. While media companies have embraced digital advertising, it typically generates far less revenue than the print versions that newspapers relied on for decades.
At the same time, media companies of all stripes have found themselves grappling with growing hostility from some supporters of President Trump, who has labeled coverage with which he disagrees as “fake news” and referred to the industry broadly as an “enemy of the people.”
