Scripps adopts poison pill to thwart Sinclair takeover attempt
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E.W. Scripps, the family controlled local broadcast conglomerate, on Wednesday adopted a shareholder rights plan, known as a "poison pill" tactic, to deflect a $538 million hostile takeover bid from the larger family controlled broadcaster Sinclair Broadcast Group.
Why it matters: The defensive tactic is meant to make it harder for Sinclair to gain a controlling interest in the company without board approval. It also buys Scripps' board more time as it considers other strategic alternatives.
Zoom in: "The board adopted the rights plan to ensure that all shareholders receive full value in connection with any proposal to acquire the company," Scripps said in a statement.
- "The rights plan is intended to protect shareholders from coercive tactics and to provide the board with time to thoroughly evaluate the offer and any other potential strategic alternatives."
The other side: "We believe the strategic and financial rationale of a potential Sinclair – Scripps combination is indisputable," a Sinclair spokesperson said in a statement.
- "Given the family control of Scripps, the only effect of adopting a poison pill is to limit liquidity opportunities for public shareholders of Scripps."
- "As requested by Scripps, we offered a proposal that builds upon previous constructive conversations, and we look forward to continuing to engage with Scripps so we can reach a definitive agreement and deliver significant benefits to shareholders and local communities."
Catch up quick: Sinclair on Monday proposed buying out the remainder of Scripps' shares for $7 apiece, after spending the last week increasing its position in the company to 9.9%.
- Scripps made it clear that the hostile bid was unsolicited but that its board "will carefully review and evaluate any proposals," including Sinclair's.
Zoom out: There have been examples in the media industry of poison pill tactics successfully thwarting hostile takeover attempts.
- Lee Enterprises, one of the last remaining independent public newspaper companies, was able to defeat a hostile takeover attempt by Alden Global Capital in 2022.
What's next: Scripps says its shareholder rights plan is effective immediately and will expire in one year.
Editor's note: This story was updated to remove a reference to a 2022 judgment that incorrectly dated it to the week of publication.
