OMAHA, Neb. – Hedge fund Alden Global Capital sends its own appeal to shareholders of newspaper publisher Lee Enterprises as part of its campaign to acquire the company.
The New York-based hedge fund, which is already one of the country’s biggest newspaper owners, on Thursday urged Lee’s shareholders to back two new directors he has appointed to help reshape the company’s strategy based in Davenport, Iowa. Lee has already rejected Alden’s offer of $24 per share to buy the company and asked shareholders to help him fight Alden’s advances.
Alden continues efforts to reshape Lee’s board and replace company chair Mary Junck and another board member, even though Lee argues that Alden has failed to meet its terms for appointing members from the administration board. Alden sued Lee to force a vote on its nominees, and a trial over it is set to begin Feb. 7 ahead of the company’s March 10 annual meeting.
Lee said he believes Alden’s $141 million bid “grossly undervalues” the company that owns the St. Louis Post-Dispatch, Buffalo News and dozens of other newspapers, nearly all of them the Nebraska dailies. Since Alden announced its offer in November, shares of Lee have climbed as high as $44.43 before falling back to close at $33.47 on Thursday.
Alden says Lee shareholders should welcome his nominees because they can help the company navigate the transition to digital publishing and improve profits. But Lee officials and local media advocates have been suspicious because Alden has a reputation for high costs and mass layoffs at the more than 200 newspapers it owns.
“We believe the company and its news and information platform have untapped potential and, with the right improved strategy and improved leadership, can deliver significant shareholder value while improving the quality of journalism for shareholders. readers and subscribers,” Alden said in his proxy filing. “Unfortunately, the current board’s decision to prioritize its own interests over what is clearly best for the company confirms our belief that Lee’s current board lacks experience and knowledge. commitment to good corporate governance necessary to achieve this goal.”
A spokesperson for Lee declined to comment Thursday, but in their own letter to shareholders earlier this week, Lee officials called Alden a “vulture hedge fund” and urged investors to reject hedge fund applicants.
“We believe that Alden is seeking a major overhaul of the Lee board and management team not because the board is flawed, but precisely because the board has shown it will be thoughtful and thorough, and therefore unwilling to sell Lee at the unreasonable and unfair price Alden offered,” Lee said in his statement.
Alden said it owns 6.3% of Lee’s shares. Two other hedge funds that hold large stakes in Lee said they believe the company is worth much more than Alden is offering.
Alden already owns all of the MediaNews Group and Tribune newspapers, including the Denver Post, Orange County Register and Boston Herald.
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