Gannett’s board of directors unanimously rejected the bid from MNG Enterprises, Inc., known as Digital First Media, to acquire the company. They said they didn’t believe the offer was “credible” or in the best interest of shareholders.
Digital First Media submitted the unsolicited proposal last month. If successful, Digital First would’ve acquired Gannett for roughly $1.36 billion. The bid was widely criticized by those in the media industry, who pointed to Digital First Media’s history of slashing newsrooms to cut costs.
“We know there are challenges that face us and our industry,” said J. Jeffry Louis, chairman of the Gannett board of directors, in a statement. “We firmly believe, however, that given our operational expertise, our focus on evolving our business model, and our unwavering commitment to remaining a trusted source of news, we are uniquely positioned to grow this company and its valuable assets.”
Digital First Media is a hedge-fund-backed group, which currently owns about 100 properties, including the Boston Herald, The Denver Post and The Mercury News, and already has a massive reach.
That reach would have been extended even more if Digital First Media successfully bought Gannett, which includes USA Today but also more than 100 other publications reporting on local communities throughout the country, including the Detroit Free Press, The Des Moines Register and The Commercial Appeal.
In a scathing release striking down the offer, the Gannett board said that MNG never “engaged” with them on the offer before The Wall Street Journal broke the news of the bid it was going to make. When Gannett did try to meet to have “basic” questions answered, MNG required the board to sign a NDA, which Gannett took to mean that it wanted to “mask MNG’s inability to finance and complete the proposed transaction.”
“As a public company, Gannett’s board would engage with any party that makes a bona fide, credible proposal that appropriately values the company and is capable of being closed. MNG’s proposal fails that test,” Gannett’s board said in a statement.
Released a couple hours after receiving Gannett’s response, MNG said in a statement that Gannett was the one to set up roadblocks to the discussion, which demonstrated that it was “not interested in seriously evaluating our premium cash proposal.”
MNG went on to say that Gannett’s plan for its digital businesses was “pie in the sky” and “not believable.”
“Gannett is presiding over a declining core business, decreasing cash flow and significant leverage because it overpaid for digital assets. Gannett’s deep structural problems are better fixed by experienced operators such as MNG, away from pressures of the public markets,” MNG said in the statement.