Hedge fund’s bid to buy rest of Tribune
Publishing met with resistance
The front page of New York's Daily News.
fund trying to take over Tribune Publishing — owner of the
Chicago Tribune, the New York Daily News and seven other newspapers —
is running into strong resistance from a union representing its
journalists as well as some shareholders.
Alden Global Capital and its chairman Heath Freeman, which already
owns 31.6 percent of the Tribune common stock, submitted a surprise
request on New Year’s Eve to be allowed to negotiate to buy
the rest of the company for $14.25 a share.
That would value the whole company at a $520 million, but Alden would
only need to fork over $366 million to snap up the shares it doesn’t
Only critics are already blasting it as a lowball offer.
“Our initial reaction is that this offer is significantly too low,”
noted Doug Arthur an analyst at Huber Research. He pointed out that
the $14.25-a-share offer is only 3.6 times Tribune’s estimated for
2020-21 EBITDA — or earnings before interest, taxes, depreciation and
amortization, a key financial metric. In contrast, USA Today owner
Gannett, even with its heavy debt load, trades at 5.1 times earnings.
Arthur thinks any offer should be priced in the $15 to $17 a share
Mason Slaine, Tribune’s third-largest shareholder with a 7.9 percent
stake, seems to agree, telling the Chicago Tribune that Alden’s offer
The wild card is Dr. Patrick Soon-Shiong, Tribune’s second-largest
shareholder, who has a 24-percent stake in the company and has
remained mum. Soon-Shiong already bought the LA Times and the San
Diego Union Tribune from Tribune for $500 million back in 2018.
But the LA Times has lost tens of millions since he bought it and his
energy of late has been devoted to his career in the health care
industry, where he’s been scrambling to develop low-cost,
easy-to-administer vaccines to combat COVID-19.
Soon-Shiong bought in around $13 a share so $14.25 would represent a
small profit. But even traders on Wall Street seem to anticipate a
higher offer with the stock closing Tuesday at $14.84, up 17 cents on
Tribune said it expects to have revenue of $670 million to $690
million in 2021 and EBITDA of between $105 million and $113 million.
At year end it completed the $160 million sale of Best Reviews, where
it had a 60-percent stake, to Nexstar, further helping its balance
Jon Schleuss, national president of the NewsGuild, which represents
eight of the nine Tribune papers (only the journalists at the Daily
News do not have a contract) blasted the bid by Alden, which has long
had a reputation in newsrooms as a cost-slashing vulture capitalist.
He also called for the three Alden-appointed members of the board to
be removed for “corporate malfeasance” for failing to disclose Alden’s
acquisition to the rest of the board in a timely fashion.
“Alden is treating Tribune shareholders with the same disrespect it
has for its employees, the newspapers they own and the communities
they serve,” Schleuss said.
“We respectfully request that the Tribune Publishing board of
directors convene a special meeting of shareholders as soon as
possible to vote on the immediate removal of Randall D. Smith,
Christopher Minnetian and Dana Goldsmith Needleman,” the Guild said.
The trio were the appointees that Alden made to the board last year,
after it had acquired the 31.6 percent stake in November 2019 by
buying the shares once held by former chairman Michael Ferro, making
Alden the company’s single largest shareholder.
Alden has also agreed to not buy additional shares until July 2021,
but the agreement apparently didn’t preclude Alden from making an
inquiry for the entire company.
Arthur at Huber Research said anything is possible, but Soon-Shiong’s
“main interest and investment seems to be the LAT. He’s got his hands
full there as well as with COVID-19 solutions at his health
His stake in Tribune would be valued at $124.8 million. He’s shown a
willingness to invest in the LA Times, but might also welcome a sudden
cash infusion as the paper, which is in the market for a new
editor-in-chief, is said to be losing $50 million a year.
Tribune CEO Terry Jimenez in a letter to employees called the offer a
But the company said late last week that the company has formed a
committee of the independent, non-Alden board members to evaluate the
bid and has yet to issue a formal response to Alden.
© 2021 NYP HOLDINGS, INC.