From “Tribune” to “Tronc”

The ongoing saga, as after Thursday contested annual meeting, between Gannett and Tribune, is a textbook case of hostile takeovers. Entrenched CEO Michael Ferro uses every trick in the play book, including private equity, position pills, diluted ownership, and manufactured white knight, to fend off takeovers.  At least, Ferro is technically correct in his defense of “shareholders’ interest,” except he is that only shareholder. There may be, at best, some moral hazard.

In Thursday annual meeting, the failure to get absolute support from overall shareholders to appoint insiders’ directors is only a symbolic slap on Ferro’s face, as the company bylaw does not require majority votes to approve directors’ appointments.

Like many contested takeovers, there are several outcomes from here on.  Gannett or others may, and most likely will, come back with a better than $15.00 bid.  It is a good thing.

Ironically, the outstanding shareholders’ lawsuit against Tribune management actually bought Ferro more time to experiment the alleged techno business model with other shareholders’ money, as Gannett signaled to hold back to wait for the further development (of the lawsuit).

It is hard not to think that the entire maneuver is no more than the prelude of “going private” from the private equity guys — Ferro and the new Vice Chairman Soon-Shiong already decided to change 170-year “Tribune” name to “Tronc“ in June and move the stock from the NYSE to NASDAQ.  It is not surprising that Tribune will be sold to another private equity group in the near future.

When do you hear that private equity is in for the long haul?

But, shareholders should see that Tribune shares have finally broken out the low of $8.50 to $12 – $14 level in last few months, totally depending on the likelihood that the higher premium prices whoever want to pay.  It is a good thing.


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