Gannett Co. said Monday that its board has unanimously rejected an unsolicited proposal to be acquired by media company MNG Enterprises Inc., also known as Digital First Media, saying the proposal undervalues the company and the board doesn’t believe the offer is credible, reports USAToday, a Gannett newspaper.
MNG on Jan. 14 offered to buy Gannett for $12 a share in cash, which at the time was a 23 percent premium above its most recent closing price of $9.75 a share. Gannett shares rose as high as $11.99 a share on Jan. 14, but closed Friday at $11.22.
“After careful review and consideration, conducted in consultation with its financial and legal advisers, the Gannett board concluded that MNG’s unsolicited proposal undervalues Gannett and is not in the best interests of Gannett and its shareholders,” the company said in statement. “In addition, Gannett does not believe MNG’s proposal is credible.”
Wall Street analysts had predicted that Gannett would decline the offer saying that it was too low and that Digital First may have been betting on a level of cost cutting in Gannett that is unrealistic. At the time, Huber Research analysts Douglas Arthur and Craig Huber said any offer for Gannett should be at least $14 a share.
Digital First, majority owned by New York hedge fund Alden Global Capital, operates daily and weekly publications including the Denver Post and the Boston Herald. Gannett's media properties include USA TODAY, The Arizona Republic and The Detroit Free Press. MNG holds a 7.5 percent ownership stake in Gannett.
The MNG offer has led to a flurry of speculation in the media and in journalism journals that the overture may set off a wave of consolidation in the industry, which has been dealing with a years-long shift to digital advertising from print publications.
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