Alden sues Lee after information writer rejects its takeover bid

The Alden International Capital hedge fund stepped up its efforts to purchase Lee Enterprises this week by submitting a lawsuit in opposition to the newspaper writer accusing Lee’s board of improperly denying shareholders the prospect to have a say on its takeover provide

The Alden International Capital hedge fund stepped up its makes an attempt to purchase Lee Enterprises this week, submitting a lawsuit that accuses its board of denying shareholders of the newspaper writer a voice within the matter.

The writer of the St. Louis Put up-Dispatch, the Buffalo Information and dozens of different newspapers rejected Alden’s provide to purchase the corporate for $24 a share, or roughly $141 million, final Thursday calling the bid, “grossly undervalued.”

Alden argued within the lawsuit filed Wednesday that Lee should not have rejected its provide with out even speaking to the hedge fund. Alden additionally mentioned Lee should not have refused to simply accept its nomination of three outdoors administrators for technical causes and has requested the court docket to order Lee to simply accept these nominees.

“Lee’s stockholder-unfriendly staggered board has exhibited all the signs of severely entrenched management targeted extra by itself energy than what’s finest for the corporate,” Alden spokesperson Cameron Gurley mentioned.

Alden additionally mentioned in a submitting with the Securities and Alternate Fee Thursday that it plans to ship Lee shareholders details about its director nominees in a proxy submitting forward of the corporate’s 2022 annual assembly, which is prone to be held in February.

Lee has been steadfast thus far in its opposition to Alden, and the corporate mentioned it does not suppose the hedge fund will prevail in court docket.

“As we defined intimately on December 3, Alden’s director nomination discover was clearly invalid and we stay dedicated to appearing in one of the best pursuits of all shareholders. Alden’s claims are baseless,” a Lee spokesman mentioned in a ready assertion.

The New York hedge fund that owns 6.3% of Lee’s inventory grew to become one of many largest newspaper house owners within the nation after swallowing all of Tribune’s newspapers earlier this yr, but it surely has a historical past of imposing extreme value cuts and layoffs at newspapers.

Two different hedge funds which can be amongst Lee’s largest shareholders, Praetorian Capital and Cannell Capital, have mentioned they suppose the corporate is value far more than Alden is providing.

“I believe there may be nonetheless an incredible quantity of worth,” mentioned Carlo Cannell, managing director of the Wyoming-based fund. In truth, Cannell estimates Lee’s inventory could possibly be value $285 a share inside 5 years if the corporate does every part proper because it continues to transition extra towards digital as an alternative of print publication.

Alden mentioned in its lawsuit that it supposed its $24 provide to be preliminary, and it may have been modified if the corporate had engaged in constructive talks.

It stays unclear how Lee’s largest financier, Warren Buffett’s Berkshire Hathaway, feels concerning the scenario. Buffett has but to remark and he didn’t instantly reply to questions Thursday. Berkshire has held all of Lee’s debt because it determined to promote its newspaper chain to Lee in 2020. At the moment, Buffett mentioned he believed Lee was one of the best long-term house for Berkshire’s newspapers.

Lee’s inventory dropped greater than 7% Thursday to $37.52. Earlier than Alden made its preliminary bid, the inventory was promoting for $18.49.

Earlier than rejecting Alden’s bid, Lee adopted a “poison-pill” plan that may make it costlier for Alden to purchase up Lee’s shares as soon as it owns greater than 10% of the corporate. At that time, the plan would enable Lee’s different shareholders to purchase shares at a 50% low cost or presumably get free shares for each share they already personal.

Lee publishes practically each day by day newspaper in Nebraska along with these in St. Louis and Buffalo. Unions that characterize journalists at these papers have come out strongly in opposition to Alden.

Alden has purchased up roughly 200 publications throughout the nation in recent times by a sequence of acquisitions. In addition to the Tribune papers, Alden additionally owns the Denver Put up, Orange County Register and Boston Herald.

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