Tribune Publishing Adopts Poison Pill to Stop Gannett Offer

Tribune Publishing Co. said it had approved a so-called poison pill as part of its defense to try to stop Gannett Co. from acquiring the publisher of the Los Angeles Times and other newspapers.

The two companies have been in a public back-and-forth for two weeks after Gannett, which owns USA Today and 107 U.S. dailies, went public with its proposal to acquire Tribune for about $400 million and the assumption of debt.

On Monday, Tribune, which also publishes the Chicago Tribune, said its newly approved shareholder rights plan kicks in if an entity acquires 20% or more of Tribune's common stock. When triggered, the other shareholders then receive a market value of two times the exercise price.

Shareholder rights plans, or poison pills, are designed to dilute the value of a stock by flooding the market with additional shares if certain conditions are met. This makes it expensive for an investor to acquire a controlling stake.

In its news release, Tribune called Gannett's "opportunistic" plan a "nonstarter" and that its "lowball price" was Gannett's attempt to "steal" the company. The rights plan will expire in a year.

"We are not going to let this noise from Gannett distract us," Chairman Michael Ferro said.

Gannett didn't immediately respond to a request for comment.

Tribune's second-largest shareholder on Friday publicly urged the board to engage in negotiations with Gannett. Oaktree Capital Group LLC, which owns almost 15% of Tribune's shares, said it would be in the best interest of shareholders for the board "to pursue discussions with Gannett to see if an acceptable agreement can be reached."

Shares of Tribune Publishing closed Friday at $11.61.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

May 09, 2016 08:45 ET (12:45 GMT)

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