Alden Global Capital, the hedge fund owner of Tribune Publishing, has made a $140m bid for US local media group Lee Enterprises.
The firm published a letter to Lee’s board of directors on Monday morning explaining why the offer would leave the company in a “stronger position”.
Lee Enterprises operates news, information and advertising businesses across 77 US markets. Its titles include the Arizona Daily Sun, the St Louis Post-Dispatch and the Buffalo News.
In recent years, Alden has become one of America’s largest newspaper owners. It completed the acquisition of Tribune Publishing earlier this year, and already owned MediaNews Group. Today, its titles include the Chicago Tribune (headquarters pictured above), the Denver Post, the New York Daily News and the Baltimore Sun.
Alden has faced widespread criticism from the US journalism industry for its stewardship of these titles, many of which have experienced large cutbacks in recent times. Last month, the Atlantic ran a scathing cover story headlined: “A secretive hedge fund is gutting newsrooms”.
In its public letter to Lee Enterprises this morning, Alden said: “Our interest in Lee is a reaffirmation of our substantial commitment to the newspaper industry and our desire to support local newspapers over the long term.”
Alden said it is “keenly interested in working constructively” with the board of Lee and that the deal would put the publisher “in a stronger position to maximize its resources and realize strategic value that enhances its operations and supports its employees in their important work serving local communities”.
Alden said: “Scale is critical for newspapers to ensure necessary staffing and in order to thrive in this challenging environment where print advertising continues to decline and back office operations and legacy public company functions remain bloated, thus depriving newsrooms of resources that are best used serving readers with relevant, trustworthy and engaging content.”
Alden is offering to purchase Lee at $24 per share, which is a 30% premium on its $18.49 share price at the close of last week. This offer would value Lee at approximately $142m.
According to the letter, an affiliate of Alden already owns a 6% stake in Lee Enterprises.
After Alden made its bid public, Lee’s share price jumped more than 20% to around $23.
Picture credit: REUTERS/Jim Young