Lee Enterprises – parent of the Chadron Record, Scottsbluff Star-Herald, Rapid City Journal, Omaha World-Herald, Lincoln Journal-Star, and over 70 other newspapers, has adopted a “poison pill” plan to protect itself from a hostile takeover.
Hedge fund Alden Global Capital earlier this month made an unsolicited offer of $24 per share or about $141-million dollars. Alden currently holds 6% of Lee’s stock and the poison pill would go into effect if that total reaches 10%.
Under the plan, other shareholders could buy more stock at a 50% discount or possibly get free shares based on how many they currently own, making it more expensive for Alden to acquire a controlling stake.
Lee Chairman Mary Junck says the idea is to give the board and investors “the time needed to properly assess the acquisition proposal without undue pressure while also safeguarding shareholders’ opportunity to realize the long-term value” of their stock.
Alden has become one of the largest newspaper owners in the country through a series of acquisitions in recent years including Berkshire Hathaway’s BH Media and this year’s purchase of the Chicago Tribune and its papers.
Along the way, Alden has developed a reputation for intense cost cutting and deep layoffs. Critics say the company is not in the newspaper industry for the long haul and is only interested in stripping away assets and “letting it bleed out for cash.”
Leaders of the newspaper unions at Lee’s papers say that although they have ongoing problems with Lee, they would like to help it fend off Alden’s purchase attempt – if it can be done.