Lee Enterprises on Wednesday said Its board of directors voted unanimously to adopt a new measure that would make it harder for Alden Global Capital — a hedge fund known to outperform local newspapers — to buy the publicly traded firm. for.
why it matters: Lawmakers, local journalists and journalism advocates have sounded the alarm over Alden’s unsolicited bid. Alden has been known to buy local newspaper companies and take deep cuts to curtail profits.
- A spokesperson for Alden Global Capital did not immediately respond to Nerdshala’ request for comment.
description: Lee Enterprises’ board voted to adopt a shareholder “rights plan” that gives shareholders more time to review Alden’s proposal “without undue pressure”, company president Mary Junk said in a statement. .
- The new measure, dubbed a “poison pill” in the business industry, would kick in if Alden were to take a 10% or more stake in the company’s outstanding common stock.
- At that point, shareholders would have the ability to buy the shares at a 50% discount, diluting the stock, and increasing their stake in the company to make it more expensive for Alden.
- The plan expires within a year unless Lee Enterprises ends it sooner. wall street journal previously reported On Wednesday Lee Enterprises’ plan.
Be smart: In a statement, Lee’s board said it “appears to be on Alden’s track record of rapidly gaining substantial controlling or ‘negative controlling’ positions in other public companies” and regulatory forms regarding Lee’s ownership. It was taking action in response to “Inconsistent Disclosure”. share.
- After increasing its stake in the company from 25% to 33%, Alden Global Capital bought the remainder of Tribune Publishing in February.
Catch up soon: Lee Enterprises executives said earlier this week That in line with its fiduciary duties, it was bound to review the unsolicited bid.
- Alden Global Capital on Monday offered to acquire Lee Enterprises for $24 per share, a 30% premium to Lee’s share price at market last Friday.
big picture: Local newspaper companies are increasingly being swallowed up by private investment firms that are not encouraged to invest in their longevity, leading to concerns about the future of local news.