One of the last independent newspaper chains unanimously rejects hedge fund’s bid to take over
By Kerry Flynn, CNN Business
One of the last independent chains of local newspapers remaining in the U.S. has rejected a takeover bid from Alden Global Capital, the hedge fund known for buying up and then strangling vital local papers.
The board of Lee Enterprises, a publicly traded company that owns daily newspapers and other publications serving 77 markets, announced Thursday it has unanimously rejected Alden’s unsolicited proposal to buy it. Lee’s papers include the St. Louis Post-Dispatch, The Buffalo News in New York, the Roanoke Times in Virginia and Kenosha News in Wisconsin.
In a Thursday statement, Lee chair Mary Junck said Alden’s proposal “grossly undervalues Lee and fails to recognize the strength of our business today.”
“We remain confident in our ability to create significant value as an independent company,” Junck continued.
Alden has garnered a reputation for destroying local newsrooms. In a recent cover story for the Atlantic, journalist McKay Coppins wrote, “There’s little evidence that Alden cares about the ‘sustainability’ of its newspapers.” Vanity Fair described Alden as the “grim reaper of American newspapers.” The editorial board at the Denver Post published an editorial in 2018 that called Alden, the parent company of the paper’s owner, “vulture capitalists” after the hedge fund implemented deep cuts.
The following year, Gannett, the largest newspaper chain in the country, rejected a bid from the same media company owned by Alden. Gannett merged with GateHouse Media in late 2019.
Earlier this year, Alden acquired Tribune Publishing, which owns The Chicago Tribune, The Baltimore Sun and other local papers, and has proceeded to dramatically reduce staff through buyouts and other cuts.
When news broke of Alden’s proposal last month, local journalists immediately spoke out against the deal. The unions of some Lee-owned papers wrote an open letter urging Lee’s board to reject it.
Lee has made its own acquisitions to strengthen its reach. When Warren Buffett’s Berkshire Hathaway exited the newspaper business in 2020, Lee inked a deal with Buffett’s BH Media Group to acquire its 31 publications for $140 million in cash.
Lee’s second largest shareholder, Praetorian Capital, also denounced Alden’s proposal. In a recent letter to Lee’s board, Praetorian Capital Founder and President Harris Kupperman called the proposal “clearly insufficient and opportunistic, grossly undervaluing the business” and suggested Lee’s shares should be worth more than $100.
Alden had proposed purchasing Lee for $24 per share. At the time, the deal, issued on a Monday, represented a roughly 30% premium on Lee’s closing stock price of $18.49 on the Friday prior. But over the following weeks, Lee’s stock has continued to climb. On Thursday, Lee reported quarterly earnings that showed total digital revenue up 37% and digital subscribers up 65% compared to the prior year.
Kevin Mowbray, president and CEO of Lee, declined to take any questions about its decision to reject Alden on a call with investors about its latest earnings report.
“Our strong foundation and well-defined long-term strategy puts Lee on a clear path to value creation for our readers, users, advertisers and our shareholders,” Mowbray said.
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