Lee Enterprises adopts poison pill stock strategy to ward off hostile takeover from Alden Global Capital - Entrepreneur Generations

Newspaper group Lee Enterprises has adopted what's known as a "poison pill" strategy to try to fend off a hostile takeover from New York hedge fund Alden Global Capital.

"Davenport, Iowa-based Lee Enterprises’ plan would kick in if Alden gets control of 10% or more of Lee’s stock in the next year," Austin Huguelet reports for the St. Louis Post-Dispatch. "At that point, other shareholders could buy shares at a 50% discount or get free shares for every share they already own. Flooding the market with additional shares would dilute the stock, making it more expensive for Alden to acquire a controlling stake. Alden said in a filing Tuesday it owns 6.1% of Lee."

The plan would give shareholders and the board more time to consider Alden's unsolicited offer of $141 million "without undue pressure while also safeguarding shareholders’ opportunity to realize the long-term value of their investment," Lee Chairman Mary Junck told Huguelet.

The stakes are high for Lee: Alden is known for slashing newsrooms to increase profits. If Alden bought out Lee, a "clear majority" of U.S. dailies would be owned by hedge funds. Moreover, it would "essentially create a local news duopoly between Alden and Gannett/Gatehouse, which merged in 2019," Sara Fischer reports for Axios.

However, the poison pill strategy might not work. Tribune Publishing tried the same thing but Alden acquired the company in May 2021 after a years-long campaign.

from The Rural Blog https://ift.tt/3lm6pWQ Lee Enterprises adopts poison pill stock strategy to ward off hostile takeover from Alden Global Capital - Entrepreneur Generations

Posted by Entrepreneur Generations

Tweet