Second-Largest Tribune Shareholder Urges Talks With Gannett

Tribune Publishing Co.'s second-largest shareholder urged the board to engage "immediately" in talks with Gannett Co. after it raised its unsolicited takeover offer to about $475 million earlier this week.

In a strongly worded letter to Tribune's board, Oaktree Capital Management Vice Chairman John Frank said he had little confidence the company's new management team can achieve value equivalent to what Gannett has offered.

Oaktree met with Tribune Chairman Michael W. Ferro Jr., the company's largest single shareholder, but felt his digital transformation strategy involved "great execution risk," given that companies with greater resources have struggled to evolve similarly, according to the letter.

"We see very substantial risk that through pursuing an independent course, Tribune will destroy enormous shareholder value," Mr. Frank wrote.

On Monday, Gannett raised its offer to $15 a share, double the price at which Tribune shares were trading before the initial offer was made public. Tribune's board unanimously rejected the initial $12.25-a-share bid May 4, saying it undervalued the company, which publishes the Los Angeles Times and Chicago Tribune.

A Tribune spokeswoman said Wednesday that the board was continuing to review Gannett's latest offer and "remains committed to continuing to act in the best interests of all shareholders."

Oaktree, which owns a 14.8% stake in Tribune, had previously and publicly urged the company to engage in talks with Gannett, but Wednesday's letter had a much sharper tone in pressuring the board. Oaktree said it has also met with representatives of Gannett.

"In summary, we have not seen anything to give us any confidence that Tribune on its own, with the resources and competitive position it has today, can achieve over any reasonable period of time the value for shareholders that we believe can likely be achieved through a transaction with Gannett," the letter read.

Write to Lukas I. Alpert at [e-mail]

(END) Dow Jones Newswires

May 18, 2016 19:25 ET (23:25 GMT)

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