USA Today publisher Gannett Co. (GCI) on Monday launched a "just vote no" campaign urging shareholders to oppose Tribune Publishing's (TPUB) incumbent director candidates as part of an effort to bolster its one-week-old $815 million hostile bid for the Chicago-based media company.
Specifically, Gannett filed proxy material seeking to have Tribune shareholders vote to "withhold" their votes for the company's eight incumbent director candidates at its annual meeting scheduled for June 2.
The approach, also known as a withhold campaign, is less intrusive that a traditional proxy contest because the activist, in this case Gannett, isn't seeking to bring on its own slate of directors and the votes are not binding on Tribune.
Nevertheless, a strong vote against Tribune's directors will likely demonstrate that shareholders want the two sides to engage in discussions about a combination. The effort could also backfire - a weak vote of opposition would show the opposite is true. Gannett, however, is unlikely to have launched the effort unless it believed Tribune shareholders would support their bid, even with only a roughly month available to persuade investors.
"We intend to give Tribune stockholders the opportunity to send a clear message to the Tribune board that its lack of engagement with our board and management team regarding our highly compelling, premium offer for $12.25 per share in cash is unacceptable," Gannett CEO Robert Dickey said in a statement.
The withhold vote campaign comes after Gannett on April 25 offered to buy Tribune Publishing for $12.25 per share in cash. The price tag values the target at about $815 million, including $390 million of debt outstanding as of Dec. 31. Tribune Publishing responded April 25 that it had received the proposal and said it's in full-review status with its financial and legal advisers. On Monday it reiterated that its board will announce the results of its evaluation of Gannett's proposal "as soon as feasible."
In its statement Monday, Gannett reiterated that its $12.25 per share offer represents a 63% premium to Tribune's closing price on April 22, the day prior to announcing its proposal.
The activist campaign comes after Gannett closed its purchase of Journal Media Group Inc. in recent weeks.
In addition, Tribune Publishing, which publishes the Chicago Tribune and Los Angeles Times, was spun off just over a year ago from Tribune Co.
In addition, Gannett last year completed a move to split its TV and newspaper publishing operations into two companies, Gannett Co. and Tegna (TGNA) . Billionaire raider-turned activist Carl Icahn in early 2015 called off a proxy contest at Gannett after the publishing firm installed a series of corporate governance measures making it easier for shareholders to call a special shareholder meeting to elect dissident directors. Gannett also set up a provision that would require any poison pill - also known as a shareholder rights plan -- to expire after 135 days unless extended by a majority vote of shareholders.
The governance provisions and Icahn's presence as a large Gannett shareholder - the activist investor reporting cutting its stake to just under 5% in January -- may have put pressure on the media company to make a hostile bid to increase its size as a preemptive measure against becoming subject to an acquisition itself.