Hedge fund returns to court in battle to buy Lee Enterprises
The new lawsuit is the latest round in the fight that began in November when Alden offered to add Lee to his growing newspaper collection by paying $24 a share, or about $141 million, for the Davenport, Iowa-based company. . The publisher of the St. Louis Post-Dispatch, Omaha World-Herald and dozens of other newspapers rejected Alden’s offer in December, saying it “significantly undervalued” the company.
Alden said in a statement announcing the lawsuit on Tuesday that Lee was “brazenly depriving shareholders by rigging the upcoming director election to secure the re-election of entrenched directors who have profited substantially even as the company is in a downward spiral and its journalism suffers.” . “
Alden opposes Lee’s decision to use a plurality standard for voting directors because it would essentially guarantee their re-election and nullify any “no” votes. As long as the directors get at least one “yes” vote, that’s more than any other candidate could get because they’re running unopposed. The New York-based hedge fund, which owns more than 200 newspapers, says directors would need to win a majority of votes cast to retain their seats.
Alden also wants Lee to enforce a rule in its bylaws that says directors who don’t get a majority vote must immediately resign.
Lee said in a statement that he was “disappointed, but not surprised” by the lawsuit. He said “Alden continues to take increasingly desperate measures in an attempt to destabilize Lee and advance his grossly undervalued hostile proposal to buy the company”.
Part of the reason Lee is fighting the takeover so hard is that Alden has a reputation for forcing deep cost cuts and layoffs on the papers he owns, which include all of the Tribune and MediaNews papers. Group that he bought in recent years.
Alden, which owns 6.3% of Lee’s shares, says the company has underperformed since it bought all of Berkshire Hathaway’s newspapers in 2020, but Lee has defended the progress it is making in raising of its digital subscriptions and online advertising revenue.
Two other hedge funds that have large stakes in Lee said they believe the newspaper publisher is worth significantly more than Alden had offered.
(Copyright 2022 by The Associated Press. All rights reserved.)