Lee Enterprises Rejects Alden Global Offer

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Local news publisher Lee Enterprises Inc. said its board had unanimously rejected an unsolicited takeover bid from Alden Global Capital LLC, a New York hedge fund that has become a media-industry consolidator, reports The Wall Street Journal. 

Alden Global on Nov. 22 offered to purchase Lee Enterprises, which has news operations in 77 U.S. markets, for $24 a share in cash, in a deal that would value the Davenport, Iowa-based newspaper company at around $141 million.

Lee’s board two days later approved a shareholder rights plan, also known as a poison pill, that for a year would prevent Alden Global from acquiring more than 10% of the company. In early December, Lee said Alden’s attempt to nominate three directors to its board was invalid because Alden failed to prove it was an eligible shareholder and submitted materials that lacked required information.

“The Alden proposal grossly undervalues Lee and fails to recognize the strength of our business today, as the fastest-growing digital subscription platform in local media, and our compelling future prospects,” Lee Chairman Mary Junck said in a statement.

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Lee’s publications include the St. Louis Post-Dispatch and the Arizona Daily Star. Alden’s MediaNews Group unit is the publisher of a large portfolio of papers that includes the Denver Post and the San Jose Mercury News.

Alden has shown a large appetite to acquire local-newspaper chains. Earlier this year it purchased Tribune Publishing, owner of the Chicago Tribune and the New York Daily News.

The hedge fund has become known for a strategy of aggressive cost-cutting, an approach critics say has gutted local outlets and is hastening the news industry’s demise. Alden says that it is trying to help newspapers survive by keeping them financially viable.

If Alden succeeds in its pursuit of a deal with Lee, the hedge fund will be on the hook for a major payment to Berkshire Hathaway Inc., because of a provision in Lee’s deal to purchase Berkshire’s media assets and secure a $576 million loan from the company. The provision requires any acquirer to pay 105% of the unpaid principal balance of the loan, including accrued and unpaid interest.