Jennifer Saba –
A heated newspaper M&A battle is printing one farce after another. Fresh from waving a toothless credit commitment in its rebuffed $1.4 billion pursuit of Gannett, the Denver Post publisher is now going after its rival’s board. But its nominees are unfit for shareholder approval.
MNG kicked off the fight in early January, offering a 23 per cent premium for Gannett. The publisher of USA Today, among other titles, said no, citing a host of concerns from financing to MNG executives’ operational skills. The privately held company is notorious for slashing costs at the newspapers it buys.
After being turned down, MNG, which already owns 7.4 per cent of Gannett, tried to counterattack with a letter in which hedge fund Oaktree Capital Management stated it was “highly confident” MNG would be able to finance a deal.
That’s as good as useless since Oaktree never indicated it would stump up.
It backfired. So now MNG is opening up another front by putting up candidates for six of the eight spots available on Gannett’s board at next month’s annual meeting.
Trouble is, all of the nominees have been or are affiliated with the publisher or its owner, hedge fund Alden Global Capital. That’s bad governance.
For starters, the line-up includes MNG Chairman Joseph Fuchs who, at 78, exceeds the age limit for directors enshrined in Gannett’s bylaws, as the target company pointed out in a letter sent to shareholders.
Worse, if successful in the proxy contest, they would not be considered independent directors for the purposes of assessing MNG’s offer. So they would have to recuse themselves from any deliberations.
They would also have to sit on the sidelines if Gannett decided to turn the tables and bid for its pursuer.
It’s true Gannett needs to up its game: Revenue is projected to decline 6 per cent and EBITDA by 10 per cent this year, according to estimates compiled by Refinitiv.
And it is still looking for a new chief executive. But MNG’s line-up offers little but confusion and distraction. There’s only one place for its director slate: the recycling bin. — Reuters