Lee Enterprises fighting takeover attempt

Lee Enterprises headquarters at 4600 E. 53rd St., Davenport. CREDIT DAVE THOMPSON

Quad Cities-based newspaper publisher Lee Enterprises is fighting a hostile takeover attempt by New York hedge fund Alden Global Capital.

The newspaper chain announced last week in a news release that it may launch a “poison pill” plan that has the goal of making it more difficult and more costly for Alden to get controlling stake of the company.

The “poison pill” plan is a defensive tactic that allows existing shareholders the right to buy more shares at a discount to dilute the ownership interest of a hostile party, the Davenport-based Lee said in the release. 

Lee’s publications include the Quad-City Times and Moline Dispatch/Argus among other daily and weekly newspapers.

Lee’s plan would allow its other shareholders to buy shares at a 50% discount or possibly get free shares for every share they already own. The plan would take effect if Alden gets control of at least 10% of Lee’s stock. 

Alden, which owns more than 6% of Lee stock, has offered to buy the rest of Lee shares for $24 each, or about $141 million. (As of Monday afternoon, Lee stock was listed at $25.35 per share.)

The “poison pill” will give Lee investors and its board “the time needed to properly access the acquisition proposal without undue pressure while also safeguarding shareholders’ opportunity to realize the long-term value of their investment in Lee,” Lee Chairman Mary Junck said in a statement.

Alden first announced its takeover bid on Monday, Nov. 22. 

In response to the poison pill plan, Alden is looking to nominate three directors for Lee’s board at the company’s 2022 annual meeting. According to Joshua Fineman of the Seeking Alpha website, those who may be nominated are John S. Zieser, Colleen B. Brown and Carlos P. Salas.

“Alden’s hope is that the board engages meaningfully and expeditiously with Alden towards a transaction in the best interests of Lee stockholders, and that a proxy contest at the 2022 annual meeting will prove unnecessary,” Alden said in a statement Monday.

Lee officials said the company denied a request from Alden seeking board nomination materials because “Alden failed to comply with the clear and substantive requirements of Lee’s bylaws,” according to a statement issued Monday by Lee Enterprises.

Phone calls for comment to Lee Enterprises headquarters were not returned as of Monday afternoon.

Alden has become one of the largest newspaper owners in the country through a series of acquisitions. Some of the newspapers owned by Alden include the Chicago Tribune, Denver Post and Boston Herald. The hedge fund has become known for making large budget cuts and layoffs at the newspapers it has purchased.

“The hedge fund has developed a reputation for slashing staff at newsrooms and other departments and selling off real estate at outlets it owns. .. Besides investing little in news, it lags the industry in technology upgrades,” Rick Edmunds, a media business analyst, wrote on the Poynter.org website.

Lee Enterprises owns 77 daily newspapers in the U.S., including the Times, Dispatch/Argus and the Muscatine Journal. The company has acquired many newspapers through various business deals over the years. One of the largest acquisitions came in 2002 when Lee bought Howard Publications and its 16 daily newspapers for $694 million. Also, in 2005, Lee bought Pulitzer Inc. and its 14 newspapers, including the St. Louis Post-Dispatch, for $1.46 billion.