Newspaper group Lee Enterprises has adopted what's known as a "poison pill" strategy to try to fend off a hostile takeover from New York hedge fund Alden Global Capital.
The plan "would kick in if Alden gets control of 10% or more of Lee’s stock in the next year," Austin Huguelet reports for the St. Louis Post-Dispatch, a flagship paper for Lee, which is based in Davenport, Iowa. "At that point, other shareholders could buy shares at a 50% discount or get free shares for every share they already own. Flooding the market with additional shares would dilute the stock, making it more expensive for Alden to acquire a controlling stake. Alden said in a filing Tuesday it owns 6.1% of Lee."
The plan would give shareholders and the board more time to consider Alden's unsolicited offer of $141 million "without undue pressure while also safeguarding shareholders’ opportunity to realize the long-term value of their investment," Lee Chairman Mary Junck told Huguelet.
The poison-pill strategy might not work. Tribune Publishing tried the same thing but Alden acquired the company in May 2021 after a years-long campaign.
The stakes are high for Lee, the hundreds of communities it serves, and maybe more: Alden is known for slashing newsrooms to increase profits. If Alden bought out Lee, a "clear majority" of U.S. dailies would be owned by hedge funds. Moreover, it would "essentially create a local news duopoly between Alden and Gannett/Gatehouse, which merged in 2019," Sara Fischer reports for Axios.
UPDATE, Dec. 2: Unions at Lee papers urged the board of directors to fight the takeover, Gateway Journalism Review reports.
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