The Tribune Publishing board adopted a so-called “poison pill” plan Monday to thwart any potential hostile takeover of the company.
The Chicago Tribune reports the shareholder rights agreement, filed Tuesday with the Securities and Exchange Commission, creates one share of preferred stock for each outstanding share of common stock as of Aug. 7.
The plan, which gives existing shareholders the right to buy newly issued shares at a substantial discount, would kick in if an entity acquires 10% or more of the outstanding common shares of Tribune Publishing without board approval.
A poison pill effectively dilutes a buyer’s holdings, making a takeover much more expensive. The plan expires July 27, 2021.
The adoption of the rights agreement follows the addition last month of Alden Global Capital co-founder Randall Smith to the newspaper company’s board. The hedge fund, which is Tribune Publishing’s largest shareholder at 32%, now has three of seven seats on the board.
Alden, a New York-based hedge fund with a reputation for sweeping layoffs at its newspaper properties, got the additional seat after extending a standstill agreement that restricts its ability to buy additional shares of Tribune Publishing.
The Alden standstill agreement expires after Tribune Publishing’s next annual shareholder meeting, which can take place no later than June 15, 2021.
In addition to the Chicago Tribune, Tribune Publishing also owns the Baltimore Sun; Hartford Courant; Orlando Sentinel; South Florida Sun Sentinel; New York Daily News; the Capital Gazette in Annapolis, Maryland; The Morning Call in Allentown, Pennsylvania; the Daily Press in Newport News, Virginia; and The Virginian-Pilot in Norfolk, Virginia.
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