Gannett Co., the owner of USA Today, lambasted flaws in an unwanted $1.36 billion takeover offer including the would-be buyer’s failure to set up financing beforehand.
Media News Group, which has also done business as Digital First Media, told the McLean, Va.-based target’s board on Thursday that it planned to borrow money to pay for the deal but had not, at that time, even contacted any potential financiers, Gannett said in a statement on Monday. Three of the six people Media News has nominated to Gannett’s board, as it fights to overcome the unanimous rejection by current directors, have clear conflicts of interest and one of them is past its mandatory retirement age, the publisher added.
“We are disappointed that at the meeting on Feb. 7, MNG again failed to provide substantive answers to the basic questions Gannett has repeatedly raised,” said Chairman J. Jeffry Louis. “Instead, MNG offered vague and generic statements that further confirmed the board’s decision.”
Gannett’s board previously said the offer from Media News, although it included a $254 million premium, undervalued a company using established brands in areas from Detroit to Phoenix and central Florida to ramp up digital news products.
Digital First, which holds a 7.5 percent stake in Gannett, said Thursday it would ask shareholders to install the six people on Gannett’s 10-member board at this year’s annual meeting, whose date has yet to be announced. A sweep would give Digital First a majority on the board, enabling it to move forward with a sale.
“The sad reality for Gannett shareholders is the company has no credible plan to attain a $12 per share valuation on its own,” Digital First said last week. “Gannett’s ‘pie in the sky’ hopes for its digital businesses are not believable.”
While the newspaper industry faces an array of challenges, Louis maintained that existing management has the expertise needed to navigate them and grow. The company comprises the publishing operations separated from the broadcasting business of a once-larger company that bore the same name; the TV firm is now known as Tegna.
Gannett’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 newspapers struggle with the loss of advertisers who can promote their products more effectively, and less expensively, online. While media companies have embraced digital advertising, it typically generates far less revenue than its print counterpart.
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.”
