Tribune Publishing, the owner of the Los Angeles Times and Chicago Tribune facing a hostile takeover bid from Gannett, adopted a plan that will make it tougher for investors to acquire more than 20% of the company.
Tribune's directors voted unanimously for the plan, which will last one year, according to a statement Monday. Under the plan, if an investor acquires 20% of the company, other stockholders will be awarded additional shares.
Tribune added the so-called poison pill after Gannett vowed to pressure shareholders to withhold their votes for all eight nominees to its board, escalating a takeover fight for the struggling newspaper publisher.
"Our board is unanimous that Gannett will not succeed with its current tactics and low ball price," Chief Executive Officer Justin Dearborn said. "Tribune stakeholders deserve better and we are confident that the steps we are taking will create better opportunities for future value than engaging with Gannett under the current circumstances."
Shares of Tribune dropped as much as 5.9% to $10.92 Monday in New York, and were trading at $11.23 at 9:53 a.m. Gannett was little changed at $16.12.
Tribune's board on May 4 unanimously rejected Gannett's $12.25-a-share takeover offer, saying the bid undervalues the company. Tribune shares had lost 18% this year before Gannett announced the unsolicited proposal. Since then the stock has surged 49%, a sign of investors' optimism in a deal getting done.
The rights plan comes just days after Oaktree Capital Group, Tribune's second-largest shareholder, said the publisher should negotiate with Gannett to see if an "acceptable agreement can be reached," threatening a fight for board control if it doesn't go along.
Gannett, in a statement Monday, described the move as "another roadblock" preventing Tribune shareholders from seeing a return on their investment.
-- Bloomberg News