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Tribune Publishing, the owner of the Los Angeles Times and Chicago Tribune, said Monday that its board of directors has adopted a shareholder rights plan, also known as a “poison pill,” in response to a recent $815 million hostile takeover bid from Gannett.
The plan will expire in one year.
“Poison pills” are a defensive measure against unwanted corporate takeovers that gives existing shareholders the right to buy added stock at a discount, making a takeover attempt more expensive and more difficult.
Tribune last week said that its board had unanimously determined that “Gannett’s opportunistic proposal understates the company’s true value, is not in the best interests of its shareholders and does not form the basis for future discussions.” The offer was for $12.25 per share in cash.
“Based on Gannett’s approach and continued hostility, the board is taking prudent measures to protect our shareholders’ best interest,” said Tribune Publishing CEO Justin Dearborn. “Our board is unanimous that Gannett will not succeed with its current tactics and low-ball price.”
He added: “Tribune stakeholders deserve better, and we are confident that the steps we are taking will create better opportunities for future value than engaging with Gannett under the current circumstances.”
Under the terms of the shareholder rights plan, except in certain situations, the rights will be exercisable 10 days from the public announcement that a person or group has acquired 20 percent or more of Tribune’s common stock or has started a tender offer that would result in ownership of 20 percent or more. Each shareholder, other than the person or company triggering the rights, will be entitled to receive “upon exercise of a right that number of shares of the company’s common stock having a market value of two times the exercise price of the right,” the company said.
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