Alden Global Capital sues to install its Lee Enterprises board members, protests company's 'poison pill' strategy

"Hedge fund Alden Global Capital has turned to the courts to try to gain leverage in its hostile takeover bid for Lee Enterprises," Rick Edmonds reports for Poynter. "In a suit filed Wednesday, an Alden affiliate argues that Lee was protecting the jobs of entrenched managers in rejecting three Alden nominees for its board of directors. The action also says that Lee was improperly abrupt in rejecting Alden’s Nov. 22 bid of $24 a share, while quickly adopting a 'poison pill' defense aimed at preventing Alden affiliates from building their share of stock beyond 10% over the next year." Edmonds notes with interest that Alden's suit essentially says its opening bid was a lowball offer and that the company is open to counter-offers.

The suit also asks for the reinstatement of its three candidates to Lee's eight-member board. "Alden’s strategy seems to have shifted back to gaining influence and seats on the board to make a case against Lee management," Edmonds reports. "It pursued that gradual approach in pushing cost-cutting moves at Tribune Publishing over a period of two years before prevailing in a contested effort to buy the company this summer."

Lee has staunchly resisted the unsolicited takeover bid, with the support of unions at its papers. Alden is known for slashing newsrooms to increase profits, and if it were successful in buying out Lee, a majority of the nation's dailies would be owned by hedge funds. The move would also create a local news duopoly of Alden and Gannett Co. (which merged in 2019 with Gatehouse Media, which took Gannett's name.