April 27--Tribune Publishing CEO Justin Dearborn has accused Gannett executives of "playing games" and of "erratic and unreliable" behavior a day after Gannett's $815 million offer to purchase the publisher of the Chicago Tribune and the Los Angeles Times was made public.
Gannett CEO Robert Dickey fired back that all he wants "is a substantive response to our proposal" and an opportunity to meet.
The war of words between the two firms Tuesday morning even included a squabble over why a dinner meeting earlier this month was canceled.
In his letter to Dickey and Gannett Chairman John Jeffry Louis -- filed Tuesday morning with the Securities and Exchange Commission -- Dearborn said his team is considering the $12.25-per-share offer that represents a 63 percent premium over Friday's closing price but blamed Gannett for a breakdown in communications between the two media companies since Gannett first made its offer in private April 12.
Gannett -- the publisher of USA Today and dozens of medium-market regional newspapers -- argues that the deal would stabilize Tribune's papers and allow for cost savings of $50 million a year. Tribune Publishing shares, issued at $25.50 in the summer of 2014, closed at $7.52 a share Friday. Monday, after the offer was made public, shares rose $3.98 to close at $11.50.
Dickey on Monday accused Tribune Publishing Chairman Michael Ferro and Dearborn of stalling, saying they had been trying to "delay constructive engagement" over the proposed deal by putting off consideration of it until later in the year.
In his letter Tuesday, Dearborn complained that Gannett canceled a planned April 18 dinner with Tribune Publishing executives in Washington, D.C., "without offering a reason" and on Sunday gave Tribune Publishing an "unreasonable" 90-minute deadline to respond before going public with its offer Monday morning.
Tribune Publishing was "finalizing our engagement of Goldman, Sachs Co. and Lazard as financial advisors and Kirkland Ellis LLP as legal advisor" on Friday, and Dearborn himself had spoken on the phone with Dickey on Saturday and Sunday, Dearborn wrote.
"We do not understand why you found our response to your proposal to be inadequate," Dearborn wrote.
"While the company has been handling your unsolicited, non-binding proposal with a constructive seriousness, Gannett has been playing games," Dearborn wrote. "Our entire team was surprised and confused by your decision to cease discussions regarding a reasonable path forward and to adopt the aggressive and hostile approach you have undertaken."
He added, though, that the deal was still under consideration.
"While we disagree with your approach, it in no way changes our commitment to act in the best interest of our shareholders," he wrote.
In an emailed response -- also filed with the SEC Tuesday -- Dickey told Dearborn "it is not constructive to address the inaccuracies in your letter with respect to the events of the past few weeks and we won't."
He did, however, say the dinner was canceled as it was a social function that would have been attended by a Tribune executive who hadn't been briefed about Gannett's offer, adding that "Tribune was well aware of Gannett's reason for canceling the dinner, and Mr. Ferro even commented to me that he would have done the same thing if he had been in Gannett's position."
Dickey added, "From the time of my first contact to Tribune, all we have asked for is a substantive response to our proposal. We are heartened to hear that your board recognizes its fiduciary duties to review our proposal expeditiously and recognizes its obligation to act in the best interests of your shareholders."
kjanssen@tribpub.com
