Dec 9, 2021 - Economy & Business

Lee Enterprises unanimously rejects unsolicited Alden takeover bid

Illustration of a hand in a suit squeezing the letters out of a newspaper
Illustration: Sarah Grillo/Axios

The board of Lee Enterprises has unanimously voted to reject an unsolicited takeover proposal from Alden Global Capital, a hedge fund known for cutting journalists at local papers to maximize profits.

Why it matters: Lee is one of the last remaining independent local newspaper chains. Alden's hostile takeover bid sparked panic about the death of local news.

  • In the past decade, private investment firms have sought to buy out local news companies that they can consolidate for profits. Such efforts resulted in the loss of thousands of local news jobs.

Details: In a statement, the Board said it determined that Alden’s proposal of $24 per share “grossly undervalues” Lee and is not in the best interests of the Company and its shareholders.

  • “We remain confident in our ability to create significant value as an independent company," said Lee Chairman Mary Junck.
  • "We have demonstrated accelerating momentum across our platforms as we execute our (growth) plan,” Junck said. Lee in April debuted a new growth strategy focused on digital transformation, accelerating subscription growth and diversifying its revenue by pushing into areas like e-commerce and video.
  • On Thursday, Lee reported positive quarterly results for the period ending on September 30th, which showed growth in profit and revenue.

Be smart: The news is the latest escalation in the spat between Lee and Alden, which will likely continue if Alden decides to come back to Lee with a higher bid.

  • On Wednesday, the investment adviser to Praetorian Capital Fund LLC, one of Lee's larger shareholders, wrote to Lee's Board saying it believed Alden's takeover proposal "is insufficient, opportunistic, and grossly undervalues LEE's business," and that it believes Lee's shares "are worth north of $100 today."

Catch up quick: Alden attempted to nominate three directors to Lee's board at the end of November. Lee's board reviewed the bid, but denied the request on Monday, saying Alden failed to comply with the requirements in Lee’s bylaws.

  • At the time, Alden suggested it was nominating Board members so that "a proxy contest at the 2022 Annual Meeting will prove unnecessary."
  • Alden tried to quickly nominate Board directors following Lee’s decision to reject Alden’s takeover offer using a corporate tactic called a “poison pill."

Our thought bubble: Any argument that shares of a local newspaper chain should be trading at "north of $100" is a difficult one to make at a time when newspapers are in terminal decline.

  • But there's so much societal pressure against Alden's bid that stakeholders may feel pressure to continue pushing off the hostile takeover offer.
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