St. Louis Post-Dispatch owner blocks play by hedge fund Alden for more control of board
Lee executives said the hedge fund, known for gutting the newspapers it acquires, did not follow the rules in trying to nominate three people to the the publisher's board.
A fight for control of 77 newspapers, 24 of which are located in the Midwest, continued as a hedge fund known for slashing newspapers hit a speed bump in its plans to acquire Lee Enterprises Inc.
On Friday, Lee rejected a trio of nominees Alden Global Capital nominated to its board of directors, claiming the nominations are invalid due to an error Alden made in the filing process that violated the board’s by-laws.
Lee, which owns the St. Louis Post Dispatch, the Omaha World-Herald and many other daily newspapers throughout the region, is staving off a takeover attempt by Alden Global Capital, a New-York based hedge fund.
Alden is infamous for slashing jobs at the newspapers it purchases, among other cost-saving measures.
The nominees would have been considered at the company’s 2022 quarterly meeting next Thursday. The deadline for nominees to Lee’s board has passed, however, and Lee says Alden will not be able to try again.
Gaining seats on the boards of companies it hopes to purchase is a tactic Alden has used in past takeovers. During its purchase of Tribune Publishing, the hedge fund slowly gained seats on Tribune’s board as part of its strategy for acquiring control of the company.
Lee said in a statement that Alden made its nominations through a third-party that does not own Lee shares and “failed to meet the most basic and most important requirements,” on the nomination process.
“Alden’s hasty and convoluted attempt to work around our simple and common procedure on the eve of the nomination deadline does not meet the clear requirements of Lee’s bylaws,” a statement from Lee read. “Alden’s failure is entirely of its own making. Alden is not entitled to invent its own process for its convenience.”
Alden did not immediately respond to a request for comment.
Lee Enterprises is headquartered in Davenport, Iowa and own ten newspapers in the state.
The hedge fund’s proposal to purchase Lee Enterprises and its many newspapers came in late November, casting alarm through Lee-owned newsrooms. The hedge fund offered $24 per Lee share, or roughly $141 million.
Lee’s board quickly adopted a “poison pill” plan which dilutes shares if Alden begins staging a hostile takeover. The plan would sell new shares to current stockholders at premium prices, making Alden’s takeover bid more difficult and less attractive.
In Nebraska, where Lee owns 12 newspapers, Omaha World-Herald News Guild President Todd Cooper said an Alden takeover would harm local, daily news in the state and region.
“The fewer reporters you have, the fewer reporters you have to watch out for government waste and wrongdoing,” Cooper said. “It becomes this cycle and they lead newspapers to circle the drain until you’re only covering the bare minimum.”
Newsroom unions from across Lee’s organizations penned a joint letter to the board last week in hopes that Lee would continue to reject any overtures from Alden.
“Alden has cut their staffs at twice the rate of competitors, resulting in the loss of countless jobs,” the letter stated. “They are not good stewards of their investments. They do not even try to run a sustainable news company.”
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