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Gannett Receives $1.36 Billion Takeover Offer From a Rival

Category: Business,Finance

MNG Enterprises, which owns one of the largest newspaper groups in the United States, proposed on Monday a takeover of the giant newspaper publisher Gannett, a move that would further consolidate a struggling industry.

In an open letter to Gannett’s board, MNG said it was willing to pay $12 per share in cash, which represents a 23 percent premium on Gannett’s closing price on Friday and values the company at $1.36 billion. Monday morning, the stock was up as much as 20 percent in premarket trading.

In its letter, MNG said Gannett, which owns USA Today, The Detroit Free Press and other publications, had “suffered from a series of value-destroying decisions made by an unfocused leadership team.” MNG owns some 200 publications, including The Denver Post and The San Jose Mercury News in California, and said it was Gannett’s largest shareholder, with a 7.5 percent stake.

Gannett, which is based in McLean, Va., said in a statement that its board would review the unsolicited proposal and told shareholders that “no action needs to be taken” at the moment.

MNG, or MediaNews Group, operates under the name Digital First Media and is owned by Alden Global Capital, a New York hedge fund.

Alden has been widely criticized as a “destroyer of newspapers” that is prone to “savage” layoffs, as well as “one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism.”

On Monday, MNG asked Gannett to immediately start reviewing strategic alternatives and commit to a freeze on acquisitions of digital businesses, which MNG said Gannett has overpaid for in the past.

It added that Gannett should also develop a better strategy for its future before hiring a chief executive to replace Robert J. Dickey, who is set to leave in May.

MNG said it had previously approached Gannett several times about a potential deal, but was ignored. In its letter, MNG criticized Gannett’s “leadership void” and its “ill-fated” attempt in 2016 to take over Tribune Publishing, the newspaper publisher then known as Tronc.

“Frankly the team leading Gannett has not demonstrated that it’s capable of effectively running this enterprise as a public company,” MNG wrote.

Both MNG and Gannett have kept busy in recent years buying other media properties. In 2015, Gannett purchased the Journal Media Group, publisher of The Milwaukee Journal Sentinel, for $280 million. The next year, it purchased The Record of Bergen County, N.J., along with its sibling newspapers, and then began a cost-cutting campaign.

MNG acquired Freedom Communications, the parent company of The Orange County Register, in a bankruptcy auction in 2016, beating a rival bid from Tribune. MNG said on Monday that The Register had been “left for dead,” but was made “viable and profitable” by its efforts.

It also said the same of The Boston Herald, which it purchased last year. But employees there and at other publications have accused the company of using layoffs as a first resort for cost-cutting — “a dehumanizing way to handle a delicate situation,” one worker wrote on Medium.

In the spring, journalists at The Denver Post, which MNG took over in 2010, openly revolted against planned layoffs. The publication “is being murdered by its owners,” the reporter John Wenzel wrote on Twitter.

A group of reporters and editors who left the Denver newspaper raised more than $161,000 on a crowdfunding platform for a new publication. The Colorado Sun began publishing online in September.

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