Question

Tribune Publishing's board has adopted a shareholder rights plan to defend itself against Gannett's unsolicited bid to buy the Chicago-based newspaper company. The publisher of the Chicago Tribune, the Los Angeles Times and other papers said Monday the plan, commonly known as a "poison pill," would kick in if a group buys more than 20 percent of Tribune Publishing's shares or begins a tender offer to seek a 20 percent stake from existing shareholders. When the plan is triggered, existing shareholders, other than an acquiring entity, could buy preferred shares at a substantial discount, thereby diluting the stake of any acquiring company and making a takeover more expensive. The plan expires in a year. Tribune Publishing's adoption of the defense, widely used in hostile takeover battles, follows its formal rejection last week of Gannett's April 12 offer of $12.25 a share to acquire the company in a deal that was valued at $815 million, including the assumption of $390 million in debt. What was Gannett’s offer price per share to Tribune in April 2016?

Answer 1

Gannett's offer to acquire Tribune Publishing in April 2016 was $12.25 per share, part of a deal valued at $815 million. Tribune adopted a 'poison pill' defense to make a takeover more difficult.

Step-by-step explanation:

Gannett’s offer price per share to Tribune Publishing in April 2016 was $12.25 a share. The deal included not only the share price but also the assumption of debt, making the total value of the offer $815 million, which accounted for $390 million in debt. Tribune Publishing countered this unsolicited bid by enacting a shareholder rights plan, often referred to as a “poison pill,” to prevent Gannett from easily acquiring a controlling stake in the company.

Such strategic defenses are common in hostile takeover attempts and are designed to protect a company from acquisition by making it more expensive and difficult for the acquiring entity to obtain a significant stake. The plan allowed other shareholders to purchase preferred shares at a discount if any entity acquired more than 20% of Tribune’s shares, thereby diluting the ownership of the acquirer.

This kind of business maneuver is an example of the challenges faced during corporate takeovers and reflects the complex nature of mergers and acquisitions within the media industry, as seen in various other instances like Rupert Murdoch's News Corporation's acquisition and later sale of MySpace, or antitrust interventions by the U.S. Department of Justice in the case of Gannett's previous acquisition.