Gannett’s stock popped Wednesday after controversial newspaper conglomerate MNG Enterprises said that hedge fund Oaktree Capital is “highly confident” that MNG can finance a $1.7 billion, hostile takeover of the USA Today publisher.
According to The NYPost, MNG — known for the brutal staff cuts it has imposed at papers like the Denver Post and San Jose Mercury News — said Wednesday that Oaktree stated MNG’s offer would be “sufficient” to cover the indebtedness of both companies and enable MNG to “fully finance a $12-a-share cash consideration,” according to MNG, citing the letter it said it received.
Oaktree — a distressed-asset investor controlled by billionaire Howard Marks — declined to comment on Wednesday.
The stock surged to $11.13 on Wednesday before shedding some of its gains to close at $10.90, up 2.5 percent.
But Gannett threw cold water on the letter. “Gannett has said in the past that MNG’s proposal fails that test, and the letter from Oaktree Strategic Credit does not alter the company’s assessment of MNG’s proposal,” the company said in a press release.
The Gannett board has fought the MNG takeover, saying it undervalues the company, which is the largest newspaper chain in the country in terms of total circulation.
MNG, known as Digital First Media, is controlled by Alden Global Capital, and the owner’s vicious cuts to its newspapers earned it the animus of many journalists in its newsrooms, who have dubbed it the “destroyer of local newspapers.”
As the proxy battle rages, Gannett CEO Robert Dickey is also preparing to step down on May 8 and headhunter Egon Zehnder is searching for his replacement.
In the meantime, Gannett on Monday named its chief legal counsel Barbara Wall to the new position of acting chief operating officer.
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