The Alden Global Capital hedge fund is sending its own appeal to shareholders of newspaper publisher Lee Enterprises as part of its campaign to acquire the company.
The New York-based hedge fund, which is already one of the nation’s largest newspaper owners, urged Lee shareholders Thursday to support two new directors it has nominated to help reshape the Davenport, Iowa-based company’s strategy. Lee already rejected Alden’s $24 per share offer to buy the company and asked shareholders to help it fight off Alden’s advances.
Alden is pressing ahead with its effort to reshape Lee’s board and replace the company’s Chairman Mary Junck and one other board member, even though Lee maintains that Alden didn’t meet its requirements to nominate board members. Alden sued Lee to force a vote on its nominees, and a trial on that is scheduled to begin Feb. 7 ahead of the company’s March 10 annual meeting.
Lee has said that it believes Alden’s $141 million bid “grossly undervalues” the company that owns the St. Louis Post-Dispatch, the Buffalo News and dozens of other newspapers, including nearly every daily newspaper in Nebraska. Since Alden announced its bid in November, Lee’s shares have surged as high as $44.43 before falling back to close at $33.47 Thursday.
Alden says Lee shareholders should welcome its nominees because they can help the company navigate the transition to digital publishing and improve profits. But Lee officials and local media advocates have been wary because Alden has a reputation for steep cost costs and extensive layoffs at the more than 200 newspapers it owns.
“We believe the company and its news and information platform have untapped potential and, with the right enhanced strategy and improved leadership, can provide significant value for stockholders while improving the quality of journalism for readers and subscribers,” Alden said in its proxy filing. “Unfortunately, the current board’s decision to prioritize their own interests over what is clearly best for the company confirms our belief that Lee’s current board lacks the experience and commitment to good corporate governance needed to achieve that end.”
A Lee spokesman declined to comment Thursday, but in their own letter to shareholders earlier this week Lee officials called Alden a “vulture hedge fund” and urged investors to reject the hedge fund’s nominees.
“We believe that Alden seeks to substantially overhaul Lee’s Board and leadership team not because the board is deficient, but precisely because the board has shown it will be thoughtful and thorough, and therefore unwilling to sell Lee at the unreasonable and unfair price that Alden has proposed,” Lee said in its statement.
Alden has said it owns 6.3% of Lee’s shares. Two other hedge funds that own large stakes in Lee have said they believe the company is worth significantly more than Alden offered.
Alden already owns all of MediaNews Group’s and Tribune’s newspapers, including the Denver Post, the Orange County Register and the Boston Herald