Alden Capital Sues Lee Enterprises Over Rejection Of Takeover Bid

      The Alden Global Capital hedge fund stepped up its hostile takeover efforts to buy Lee Enterprises on Wednesday by filing a lawsuit against the newspaper publisher.

      The suit accuses the Lee board of directors of improperly denying shareholders the chance to have a say on its takeover offer. 

       Lee’s 77 newspapers across the country include the Chadron Record, Omaha World Herald, Lincoln Journal Star, Rapid City Journal, and Scottsbluff Star Herald.

        Lee rejected Alden’s offer to buy the company for $24 a share, or roughly $141 million, last Thursday with the board concluding the offer “grossly undervalued” the company. 

      Alden spokesman Cameron Gurley says “Lee’s stockholder-unfriendly staggered board has exhibited all the symptoms of severely entrenched leadership focused more on its own power than what’s best for the company.”

     Alden argues in its lawsuit that Lee shouldn’t have rejected its offer and rebuffed its attempt to nominate three directors without even talking to the hedge fund, calling the $24 bid a starting point for constructive talks.

     Lee officials call Alden’s claims“baseless” and its director nomination form was clearly invalid under Lee’s corporate bylaws on multiple grounds. 

       The board’s claim that Alden’s offer “grossly undervalued” Lee is supported by 2 other hedge funds that are among its biggest shareholders – Praetorian Capital and Wyoming-based Cannell Capital.

      Both think Lee is worth much more than that with Cannell managing director Carlo Cannell estimating the stock could be worth $285 per share within 5 years if the company does everything right as it continues to transition to more digital publishing.

      Wall Street seems to agree. Lee’s stock rose another 12% to close at $40.43 per share before the lawsuit was filed. Before Alden made its initial bid, the stock was selling for $18.49.

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