Tribune Publishing Co has decided to reject Gannett Co Inc's latest $864 million takeover proposal, but will agree to share confidential information with the U.S. newspaper company, people familiar with the matter said on Sunday.
The move offers a path for Gannett, owner of USA Today, and Tribune Publishing, which owns a stable of newspapers including the Los Angeles Times and the Chicago Tribune, to engage in negotiations following a bitter dispute.
Last week, Gannett asked Tribune Publishing shareholders to withhold support for the latter's eight nominees to the board of directors at Tribune Publishing’s annual meeting on June 2.
While Tribune Publishing considers Gannett's $15 per share cash offer to be inadequate, it will offer Gannett access to some of its confidential corporate information under a non-disclosure agreement, the people said.
There is no certainty that Gannett will use this opportunity to table a higher offer, the people cautioned, asking not to be identified because the deliberations are confidential.
Tribune and Gannett representatives could not immediately be reached for comment.
Gannett's pursuit of Tribune has come at a challenging time for the newspaper industry, which is grappling with high costs, shrinking advertising dollars and a broad move toward digital content. Gannett is betting that bigger scale will bring it savings and help it generate more profit.
With Tribune Publishing now an acquisition target, it remains to be seen whether other companies in the sector, such as New Media Investment Group Inc, News Corp and McClatchy Co, will show an interest.
Last month, Gannett made an unsolicited takeover offer for Tribune at $12.25 per share in cash, in a deal worth roughly $815 million. It followed up this month with a $15 per share offer for Tribune.
Oaktree Capital Group LLC, the second largest shareholder in Tribune Publishing, has urged the Chicago-based company to explore a sale and sent a letter to Tribune's board last week.
Proxy adviser Institutional Shareholder Services Inc (ISS)recommended that Tribune shareholders vote for the nominated directors.
The second largest U.S. newspaper chain by circulation, Digital First Media, publisher of the Denver Post and San Jose Mercury News, explored a sale last year before negotiations fell apart with buyout firm Apollo Global Management LLC.
Billionaire Mort Zuckerman also tried to sell The New York Daily News last year, but then scrapped the plan after bids for the newspaper came in too low.