Newspaper publisher Lee Enterprises – owner of the Chadron Record, Omaha World Herald, Rapid City Journal, and the Scottsbluff Star Herald – has rejected a takeover offer from the Alden Global Capital hedge fund
The Lee board on Thursday unanimously rejected Alden’s offer of $24 per share or about $141 million because it “grossly undervalues” the company announcing at nearly the same time a $5.3-million dollar fiscal 4th-quarter profit this year.
Lee had a $1.3-million dollar loss for the same period a year ago. A big reason for the turnaround is the digital side of its newspapers. The number of digital-only subscribers has grown 65% from last year to 402,000.
Alden had acquired 6% of Lee stock before making its offer. The Lee board responded by passing a “poison pill” measure that creates millions of new shares if Alden’s holdings reach 10%.
Lee then rejected a slate of 3 directors proposed by Alden, ruling it violated company bylaws by coming from a third-party that doesn’t own Lee stock and “failed to meet the most basic and most important requirements” of the nomination process.
Lee issued a statement calling Alden’s maneuver a “hasty and convoluted attempt” to work around a simple and common procedure on the eve of the nomination deadline, adding that “Alden is not entitled to invent its own process for its convenience.
When Alden acquired the parent of the Chicago Tribune, it gradually gained control by getting supporters on the Tribune’s board. The hedge fund is one of the largest newspaper owners in the country but with a reputation for intense cost cuts and layoffs.
Critics say Alden isn’t in the newspaper business for the long haul and is only interested in stripping away assets from individual papers and letting them “bleed out for cash.”
Lee owns 77 papers, dailies and weeklies, around the country including 12 in Nebraska and 24 in the Midwest.