Tribune Publishing brings in new investor to end Gannett's bid
24 May 2016
In a move that could end Gannett's bid for Tribune Publishing Co, Tribune not only rejected Gannett's $864-million offer, but also brought in a new investor.
According Tribune Publishing's statement, yesterday, it had ''thoroughly evaluated'' Gannett's latest proposal to acquire it for $15 per share in cash and determined that it was not in the best interest of its shareholders.
Coupled with the rejection was a $70.5 million investment by Nant Capital, founded by Patrick Soon-Shiong, who has started several healthcare companies and also partly owns the Los Angeles Lakers basketball team. Nant Capital will get 4.7 million shares at $15 each to support the company's stand-alone strategy, the Tribune Publishing announced yesterday.
Soon-Shiong also becomes Tribune's new vice chairman.
Tribune Publishing's largest shareholder is Merrick Ventures, the private equity firm founded by Michael W Ferro Jr, who is also chairman of Tribune Publishing. Between them Merrick and Nant hold almost one-third of Tribune's shares.
Shares of Tribune Publishing plunged over 15 per cent in morning trading yesterday, on the news of the rebuff to Gannett.
The new investment would also help counter the stance of Oaktree Capital Management, which had been in favour of exploring a potential combination of the two companies. Oaktree, which had been Tribune's second-largest shareholder until the investment by Nant Capital, had urged the board in a letter filed with the Securities and Exchange Commission to set up an independent committee to consider Gannett's proposal.
The investment had come at the instance of Ferro, who -- in less than four months since becoming the company's top shareholder -- had ousted chief executive Jack Griffin and announced a tech-driven plan to turn the company around.
The development forges a united front between the company's two largest shareholders, who together control 27 per cent of Tribune stock -- and have the ability to buy up to a combined 50 per cent.
''I think what we just saw playing out over the last week was a game of chess, and I think this is checkmate in Ferro's favor,'' said Lloyd Greif, chief executive of downtown L.A. investment bank Greif & Co. ''With Patrick coming in, it effectively neutralizes not just Gannett, but Oaktree,'' www.latimes.com reported.