Good Wednesday Morning and it’s choppy.
Daylight – As I was driving home from work yesterday evening, the song that popped up on Pandora was “Tuesday’s Gone,” and thankfully it’s gone. It was a day of playbacks – in response to my Monday Morning Report on the Gannett bid for Tribune Publishing, the Tribune team spent a long time on the phone with me, telling me over and over how their Chairman Michael Ferro’s only interest is whatever is best for shareholders and that nothing was personal between him and Gannett, as I had stated in the report.
Well, Ferro spent all day yesterday convincing not only me, but everyone that it is such a personal battle he is willing to gamble big time with shareholders’ wealth on the line. He rejected Gannett’s improved offer to buy the company and then tagged Patrick Soon-Shiong’s deep pockets for a $70.5 million dollar investment. Ferro and team can argue this is all designed to draw a higher offer, but the Soon-Shiong investment is a poison pill meant to block the deal and could mean Tribune Publishing investors could be left flapping in the wind with a declining stock if Gannett walks from the table.
Here is the deal – Instead of engaging with Gannett over their latest $15 dollar per share offer, which valued the company at $864 million and a 100 percent premium in their stock since Gannett made the first offer, Ferro and board struck a side agreement with Soon-Shiong that pays him a 13 percent interest rate on the $70 million dollar investment. The cherry on top is a seat on the board as vice chairman.
Mr. Soon-Shiong is a major stakeholder in the Los Angeles Lakers, so he is used to being courtside for a big game. Also, yesterday Ferro asked Gannett, publisher of USA Today and 100 other media entities, to open its book for a two-way due diligence process. This shows all the cards in Ferro’s hands face-up – it’s deeply personal.Gannett is offering a straight cash deal. Dealb%k