Gannett, the US parent company of regional publisher Newsquest, has rejected a takeover bid from publishing rival MNG Enterprises.
MNG, also known as Digital First Media, made a cash offer for Gannett of $12 per share on 14 January after building up a 7.5 per cent stake in the publisher, which bought Newsquest in 1999.
In a statement published today, Gannett said that its board had unanimously decided to reject the unsolicited offer after deciding it “undervalues Gannett and is not in the best interests of Gannett and its shareholders”.
The company added: “Gannett does not believe MNG’s proposal is credible.”
John Jeffry Louis, chairman of the Gannett board of directors, said: “Our board of directors is confident that Gannett has significant value creation potential.
“Our vision and pursuit of our digital transformation, combined with our USA Today Network strategy, enables us to serve more directly and efficiently the persistent demand of our audiences and customers to engage with their communities.”
Gannett introduced its USA Today Network, which combines its national and local brands into one group in a bid to “improve coordination” of its journalists and resources nationwide, in December 2015.
Louis added: “We believe that our future — and that of the industry — turns on thoughtful investments in journalism and marketing solutions, so we can deliver engagement when, where and how our audiences and customers demand it.
“Delivering on this purpose will deliver value to our shareholders and benefit the communities we serve.
“We know there are challenges that face us and our industry. We firmly believe, however, that given our operational expertise, our focus on evolving our business model, and our unwavering commitment to remaining a trusted source of news, we are uniquely positioned to grow this company and its valuable assets.”
In its statement, Gannett said it believed MNG had no “realistic plan” for the buyout after it refused to share details of how it would fund the deal.
It added that, as it is a public company, it would engage with any “bona fide, credible proposal” that “appropriately values the company and is capable of being closed”. “MNG’s proposal fails that test,” it said.
Gannett owns USA Today and hundreds of local newspapers in the US, as well as Newsquest, which is the UK’s second largest regional publisher and has been expanding its portfolio in the past year.
MNG is owned by New York hedge fund Alden Global Capital. It publishes about 200 newspapers in the US including the Denver Post, Boston Herald and San Jose Mercury News.
It has a reputation in the US for “for cost-cutting and job slashing”, leading to fears for the future of Newsquest titles in the UK after the takeover proposal was revealed.
But Gannett itself culled around 400 jobs in January, according to reports. The Poynter Institute, a major journalism school in the US, described the publisher’s cuts as “not minor”.
Looking to the future, Gannett said today it would consider “disciplined, selective acquisitions” that would provide synergies with its existing brands.
Picture: Reuters/Larry Downing
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