This could be the knockout punch to Heath Freeman and Alden Global Capital/MNG Enterprises’ big takeover of Gannett.
Two proxy advisory firms weighed in on the side of the Gannett board on Tuesday in its slugfest with Alden, which is pushing to get three of its own candidates on the eight-person board of directors that oversees USA Today and more than 100 local dailies.
Glass Lewis and Egan-Jones gave the dissident shareholder bid by MNG — also known as Digital First Media — a big thumb in the eye and urged Gannett shareholders voting at the May 16 annual meeting to back the eight incumbent Gannett board members.
MNG, which owns the Miami Herald, the Kansas City Star and the San Jose Mercury News, is offering $12 a share, which is about a 28 percent premium over Gannett’s closing price of $9.01 (down 3.2 percent) on Tuesday.
Glass Lewis sided with the Gannett board over conflicts of interest by the MNG dissidents and their ties to controversial hedge fund Alden Global Capital and its ability to finance a $1.36 billion takeover.
“We question the sincerity of MNG’s bid and have outstanding concerns regarding the shareholder’s capacity to obtain financing in order to close the transaction,” Glass Lewis said.
Glass Lewis pointed out that Freeman is vice chairman of MNG, which “is a large newspaper operator and could be viewed as a direct competitor to Gannett, in our view.”
“Moreover, we do not believe the dissident [slate] has made a strong case that the Gannett board is in need of, or would benefit from, additional real estate expertise that would be provided by nominee Dana Needleman or from additional newspaper operating experience that would be provided by nominee Steven Rossi.”
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