Gannett defeats newspaper rival MNG’s hostile takeover attempt

Newspaper giant Gannett won all eight board seats in a hotly contested shareholder vote on Thursday, winning a bitter proxy war with its cost-cutting rival MNG Enterprises.

MNG, reviled by journalists for slashing staff at papers like the Denver Post and the Boston Herald, had waged a hostile $1.36 billion takeover bid for Gannett, the publisher of USA Today and more than 100 local papers nationwide.

Also known as Digital First Media and controlled by hedge fund Alden Global, MNG had accused Gannett of mismanaging its print-news empire. The News Guild has called MNG a “destroyer of newspapers” for its deep cuts. Its ax-swinging, meanwhile, has helped it achieve a 15-percent profit margin, among the best in the industry.

Gannett shares fell 2 percent to $8.69 in early afternoon trades, giving it a market capitalization of $1 billion. that’s more than 25 percent below the price of MNG’s $12-a-share bid.

“This outcome demonstrates that Gannett shareholders recognize the continued progress we have made toward our ongoing digital transformation and agree that our strategic plan is the best path to deliver value for all Gannett shareholders,” Gannett said in a statement.

Alden, a New York-based hedge fund headed by Heath Freeman that owns 7.5 percent of Gannett’s stock, blasted Thursday’s vote, calling it a “win for an entrenched Gannett board that has been unwilling to address the current realities of the newspaper business.”

“If Gannett’s Board does not shift course from overpaying for non-core aspirational and dilutive digital deals, we believe the stock will drop further,” Alden said.

MNG’s bid was losing steam even before last week, when influential proxy advisory firms Glass Lewis and Egan-Jones both said that shareholders would be better off sticking with the incumbent slate over the insurgents and questioned whether the Alden/MNG bid had any sold financing backing.

Only Institutional Shareholder Services recommended a partial endorsement, saying that Steve Rossi, an ally of Freeman and a one-time CEO of MNG Enterprises should be put on the board.

The re-elected board members are: John Jeffry Louis, John E. Cody, Stephen Coll, Donald Felsigner, Larry Kramer, Debra Sandler and Chloe Sladden.

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