Lee Enterprises Urges Shareholders to Reject 'Vulture Hedge Fund'

Alden Global Capital Makes Cash Offer to Buy Lee Enterprises

At $24 a share, the unsolicited cash offer is valued at $141 million.

Alden Global Capital is on the hunt for its next big acquisition, and Lee Enterprises, the nation’s fourth largest newspaper chain, is the hedge fund’s latest target. Last week, Alden made an unsolicited cash offer to Lee Enterprises’ board of directors to buy the media organization for $24 a share, a 30% premium over Lees’ closing price of $18.49 per share on November 19, 2021. This values Lee Enterprises at approximately $141 million.

“We believe that as a private company and part of our successful nationwide platforms, Lee would be 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. 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,” said Alden Global Capital in a November 22 letter to Lee Enterprises’ board of directors.

“We are keenly interested in working constructively with the Lee Board of Directors (the “Board”), with the goal of getting to a successful transaction with value, speed and certainty. 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 said.

“We hope that the Board will work with us to maximize value and opportunities for all Lee stockholders and employees, and we look forward to receiving a response to this non-binding proposal in an expeditious manner,” added the hedge fund.

About Lee Enterprises

Founded in 1890 in Iowa, Lee Enterprises offers local news coverage and information and advertising services in 77 U.S. markets and communities in 26 states. Lee publishes more than 90 daily newspapers and websites including the Arizona Daily Sun, Arizona Daily Star, Tucson.com, the St. Louis Post-Dispatch, Missoulian, Richmond Times-Dispatch, The Buffalo News, Omaha World-Herald, and Tulsa World. The company’s local and national digital media and advertising platforms attract over 44 million unique visitors monthly and 1.2 million newspaper subscribers.

In a news release, Lee Enterprises confirmed receipt of Alden’s unsolicited, non-binding proposal. Alden purchased a 6% stake in Lee Enterprises in 2020, according to The New York Times.

“Lee’s Board of Directors and management team are committed to acting in the best interests of all shareholders. Consistent with its fiduciary duties, and in consultation with its financial and legal advisors, Lee’s Board of Directors will carefully review Alden’s proposal to determine the course of action that it believes is in the best interests of the Company and Lee shareholders. There is no need for Lee shareholders to take any action at this time,” said Lee.

Lee responds to unsolicited offer

Two days after acknowledging the Alden offer, the Lee Enterprises’ board unanimously adopted a limited-duration shareholder rights plan that went into effect immediately. The goal of the Rights Plan is to protect shareholders’ rights and to ensure they receive fair and equal treatment in any takeover bid.

“In adopting the Rights Plan, the Board noted Alden’s track record of rapidly acquiring substantial control or “negative control” positions in other public companies and its seemingly inconsistent disclosures on its Schedule 13Ds and Form 13Fs filed with the U.S. Securities and Exchange Commission (“SEC”) regarding its purported ownership of Lee’s shares,” said Lee in a November 24 news release.

“Consistent with its fiduciary duties, Lee’s Board has taken this action to ensure our shareholders receive fair treatment, full transparency and protection in connection with Alden’s unsolicited proposal to acquire Lee,” said Lee Chairman Mary Junck. “This Rights Plan will provide Lee’s Board and our shareholders with the time needed to properly assess the acquisition proposal without undue pressure while also safeguarding shareholders’ opportunity to realize the long-term value of their investment in Lee.”

Latest acquisition since Tribune Publishing buy

In May, Tribune Publishing shareholders approved the sale of the media organization to Alden for $633 million at a special shareholders’ meeting. Two-thirds of the shareholders had to approve the sale for it to go through. Tribune said that approximately 81.28% of the shares held by non-Alden shareholders voted to approve the merger. Alden currently owns 31.3% of Tribune Publishing stock. Dr. Patrick Soon-Shiong, the second largest shareholder, had the power to halt the sale, but he opted not vote.

“Today’s results represent an important milestone in completing the transaction, and we appreciate the strong support we received from Tribune stockholders,” said Philip G. Franklin, chairman of the board and a member of the special committee, in a news release.

Tribune Publishing owns the Chicago Tribune, The Baltimore (Maryland) Sun; the Hartford (Connecticut) Courant; the Orlando (Florida) Sentinel; the South Florida Sun Sentinel; the New York Daily News; the Capital Gazette in Annapolis, Maryland; The Morning Call in Allentown, Pennsylvania; the Daily Press in Newport News, Virginia; and The Virginian-Pilot in Norfolk, Virginia. Upon completion of the sale, Alden planned to take the company private.

Insider Take

It seems that Alden Global Capital is not content with its growing media conglomerate, snatching up media properties like Tribune Publishing via questionable business practices. Alden wants to continue to absorb (or should we say eliminate) additional competition through a hostile takeover. While shareholders may potentially get a premium in exchange for their shares of Lee Enterprises, those who suffer will be subscribers, their local communities and the newsrooms serving them. Alden has a reputation for buying media companies and gutting them, drastically reducing staff and cutting costs so that good, quality journalism and local news coverage becomes far more difficult to produce – all in the name of a profit. Alden also seems to enjoy the thrill of the hunt and making their prey fight to stay alive. We hope this isn’t the case here, but it is almost certain that this will get ugly.

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