Tribune Publishing Co. TPUB 5.26 % ’s second-largest shareholder publicly urged the board to engage in negotiations with Gannett Co. after it rejected an approximately $400 million takeover offer from the rival newspaper publisher.
Oaktree Capital Group LLC, which owns almost 15% of Tribune’s shares, said it would be in the best interest of shareholders for the board “to pursue discussions with Gannett to see if an acceptable agreement can be reached.” Oaktree’s comments were disclosed Friday in a regulatory filing, implying it plans to take a less passive approach to its holding.
Oaktree also said that if other parties express interest in an acquisition, Tribune should be open to discussions.
The large shareholder’s public comments may increase pressure on the board to reconsider engaging in talks with Gannett. Tribune’s board on Wednesday said it was rejecting Gannett’s offer, calling it an opportunistic bid that undervalued the company, which publishes newspapers including the Los Angeles Times and Chicago Tribune.
Tribune shares rose following Oaktree’s filing, rising 3.1% to $11.37 in midafternoon trading.
In a statement Friday, Tribune reiterated that Gannett’s offer understated the company’s “true value and is not a basis for further discussion.”
“While the company is not for sale, the board is always open to evaluating any credible proposal that it reasonably believes, in good faith, to be in the best interests of the company and its shareholders,” the statement read.
A Gannett spokesman declined to comment.
Gannett, which owns USA Today and 107 U.S. dailies, approached Tribune on April 12 proposing to buy the company for about $815 million, including the assumption of debt. Tribune asked for time to hire financial advisers to review the offer and prepare for its first-quarter earnings results during which the company planned to lay out a new digital strategy.
But Gannett felt the company’s management was stalling and decided to go public with its offer on April 25 in an effort to appeal directly to shareholders. The $12.25-a-share bid amounted to a 63% premium above where Tribune shares were trading at the time.
Since then, the two sides have engaged in an increasingly testy public back and forth, with Tribune accusing Gannett of “playing games” and calling its approach “aggressive and hostile.” Earlier this week, Gannett urged Tribune’s shareholders not to back Tribune’s slate of board nominees at the annual meeting on June 2 to send a message to the company to engage in talks.
‘While the company is not for sale, the board is always open to evaluating any credible proposal that it reasonably believes, in good faith, to be in the best interests of the company and its shareholders.’
Gannett told investors that Tribune’s board in February had approved the sale of 16.6% of the company’s stock to Michael W. Ferro Jr.’s Merrick Media LLC for $8.54 a share, a 5% discount from where the stock was trading at the time. The private placement deal, while providing a needed cash infusion at the time, diluted the shares outstanding, and the company also canceled its dividend.
Mr. Ferro became Tribune’s nonexecutive chairman, then replaced the company’s CEO and much of its upper management within weeks.
He also moved to expand Tribune’s board from seven members to 10, adding three directors who are associates of Mr. Ferro. A proxy vote slated for the annual meeting asks shareholders to approve the reduction of the board to eight seats after two current members step down in June, which would result in Mr. Ferro and his associates controlling five of the eight seats.
Oaktree had originally been a Tribune debtholder dating to before Tribune’s 2008 bankruptcy. When it emerged from bankruptcy protection four years later, Oaktree became one of its largest shareholders. In 2014, Tribune Publishing was spun off from broadcast assets that now comprise Tribune Media Co., with Oaktree ending up with stakes in both companies.
While Oaktree President Bruce Karsh is chairman of Tribune Media’s board, Oaktree had taken a more hands-off approach with Tribune Publishing. In November, Tribune Publishing disclosed in a regulatory filing that Oaktree was prepared to sell some or all of it stake, although it hasn’t yet reduced its position in the company.
Lukas I. Alpert at email@example.com