Gannett rejects MNG Enterprises offer, says it's not credible

MNG, which owns The Denver Post and The Boston Herald, offered to buy Gannett on 14 January.

However, Gannett said on Monday that after careful consideration with its financial and legal advisors, it concluded that the proposal was not in the best interest of its shareholders.

Chairman J. Jeffry Louis said: "Our board of directors is confident that Gannett has significant value creation potential. Our vision and pursuit of our digital transformation, combined with our USA Today Network strategy, enables us to serve more directly and efficiently the persistent demand of our audiences and customers to engage with their communities.

"We believe that our future - and that of the industry - turns on thoughtful investments in journalism and marketing solutions, so we can deliver engagement when, where and how our audiences and customers demand it. Delivering on this purpose will deliver value to our shareholders and benefit the communities we serve."

MNG, which is Gannett's largest active shareholder with a 7.5% stake, said last month that it had approached Gannett's board on several occasions about a potential strategic combination but that the company had failed to "meaningfully" engage.

MNG sent a letter to shareholders arguing that Gannett has suffered from "a series of value-destroying decisions made by an unfocused leadership team".

This includes "overpaying for a string of non-core aspirational digital deals and pursuing an ill-fated hostile for Tribune Publishing, all while Gannett’s core revenue, EBITDA, margins and free cash flow continue to decline", it said.

MNG noted at the time that Gannett has lost 41% of its value since its IPO two and half years ago, significantly underperforming it peer group and indices.

Gannett said on Monday that its board would engage "with any party that makes a bona fide, credible proposal that appropriately values the company and is capable of being closed".

"MNG’s proposal fails that test," it added.

The offer price of $12 per share represents a 41% premium to Gannett's year-end 2018 closing price and a 23% premium to the stock's closing price on the last trading day before the offer was made.