Lee Enterprises Inc. — one of few sizeable American newspaper chains not owned by hedge fund Alden Global Capital LLC — has adopted a limited duration shareholder rights plan that would prevent Alden from acquiring more than 10% of the company, as Lee Enterprises considers Alden’s hostile bid for the company.
The rights plan is also known as a ‘poison pill,’Lee Enterprises announced Wednesday that the change is immediately effective and will continue to be in effect for a year. It expires on Nov. 23, 2022.
According to the statement the rights plan was approved in response to “an unsolicited and binding proposal”Lee Enterprises. On Monday, BloombergAccording to other sources, Alden Global had offered Lee for acquisition in a deal worth $142 Million.
Alden Global has a reputation of aggressive cost cutting. Alden Global executive Heath Freeman is not. According to the Wall Street JournalIn an interview last year, the hedge fund stated that it had never closed down a newspaper. However, it has a history in merging titles and cutting staff to reduce costs.
Lee also owns the St. Louis Post-Dispatch in St. Louis, the Arizona Central Recorder, Tucson, and the Buffalo News among other local news publications. Lee purchased the Buffalo News as part of an acquisition of Berkshire Hathaway’s media group newspaper business for $140 million. Lee Enterprises stated in its statement that the company has over 350 weekly and specialty newspapers serving 77 markets across 26 states.
“In adopting the Rights Plan, the Board noted Alden’s track record of rapidly acquiring substantial control or “negative control”Positions in other public companies and the seemingly inconsistent disclosures on Schedule 13Ds and Form 13Fs filed to the U.S. Securities and Exchange Commission“SEC”) regarding its purported ownership of Lee’s shares,” the statement reads.
“The Rights Plan is intended to enable the Company’s shareholders to realize the long-term value of their investment, ensure that all shareholders receive fair and equal treatment in the event of any proposed takeover of the Company, and to guard against tactics to gain control of the Company without paying all shareholders an appropriate premium for that control. The Rights Plan applies equally to all current and future shareholders and is not intended to deter offers or preclude the Lee Board from considering offers that are fair and otherwise in the best interest of the Company’s shareholders.”
Mary Junck, Chairman of Lee, stated this in the statement. “Consistent with its fiduciary duties, Lee’s Board has taken this action to ensure our shareholders receive fair treatment, full transparency and protection in connection with Alden’s unsolicited proposal to acquire Lee. This Rights Plan will provide Lee’s Board and our shareholders with 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 investment in Lee.”
Alden Global Capital sparked outrage in February when it acquired Tribune Publishing — the publisher of the New York Daily News, the Chicago Tribune, the Baltimore Sun and a former owner of the Los Angeles Times — in a $630 million deal.