Tribune adopts ‘poison pill’ plan to fend off Gannett

NEW YORK — In an attempt to fend off a takeover by USA Today owner Gannett, Tribune Publishing says it adopted a one-year shareholder rights plan.

Known as a “poison pill,” these types of plans are used to fight off hostile takeovers.

Gannett Co. made an unsolicited offer last month to buy Tribune Publishing for more than $388 million. Including the assumption of debt and other factors, the total value of the offer was pegged by Gannett at about $815 million. Chicago-based Tribune Publishing Co. rejected the deal last week, saying that Gannett’s offer was not enough for the company, which owns the Los Angeles Times and Chicago Tribune.

Tribune Publishing’s plan, announced Monday, allows existing shareholders to buy preferred stock if a person or group acquires at least 20 percent of its stock.

McLean, Virgina-based Gannett Co. called the defensive maneuver “unfortunate” in a statement released Monday.

“Tribune is putting up another roadblock to prevent its stockholders from realizing compelling, immediate and certain cash value for their investment,” Gannett said.

USA Today owner Gannett wanted to buy Tribune Publishing so it could expand its USA Today Network, an effort to unite USA Today with its more than 100 local daily newspapers.

Tribune Publishing said last week that “after thorough consideration” its board decided the proposal from Gannett Co. understates its true value and is not in the best interests of its shareholders.

Tribune Publishing “is in the early stages of a compelling transformation” that will be better for shareholders, CEO Justin Dearborn said in a statement issued at the time. While the company’s board is open to evaluating “credible” offers, Gannett’s “opportunistic proposal” is not up for further discussion, he said.

Gannett was critical of the analysis that led to the decision.

Chairman John Jeffry Louis said the Tribune Publishing decision to reject the bid reaffirms his company’s view that Tribune’s board “never intended to engage with us.”

Gannett reiterated that it wants Tribune shareholders to withhold votes for its board member nominees up for election in June to send a message to resume takeover talks.

Gannett’s takeover bid came after a shake-up at Tribune. In February, Chicago investor Michael W. Ferro Jr. gave Tribune a $44.4 million cash infusion through his company Merrick Media. Ferro was later named as non-executive chairman of the newspaper publisher. Weeks later, the company ousted its CEO and named Justin Dearborn to that key job.

Shares of Tribune Publishing Co. slipped 5 cents to $11.56 in afternoon trading. Shares of Gannett Co., based in McLean, Virginia, fell 22 cents, or 1.4 percent, to $15.91.