Gannett seized on a vote on board director nominees by Tribune Publishing shareholders on Thursday to claim that the publisher of the Los Angeles Times and Chicago Tribune should engage with it in acquisition talks.
Unable to press on with its $864 million bid for Tribune Publishing, and having missed a deadline to put forward its own board nominees, Gannett had sought to turn the vote into a referendum on the Tribune board's handling of its takeover approach, which was first made on April 12.
The election of Tribune Publishing's eight board director candidates was not in doubt at Thursday's annual meeting because they were the only ones being nominated. All of them were selected to the board, according to the preliminary tally.
Gannett said that, based on the advice of its proxy solicitor, about 49 percent of the votes cast by shareholders who are not affiliated with Tribune Publishing's management withheld their support for the entire slate of Tribune's director nominees.
"Gannett continues to have faith in the value of all of Tribune's assets as part of Gannett," it said in a statement on Thursday. "Our $15.00 per share offer would deliver superior and certain value for Tribune's owners at a tumultuous time for the company."
Gannett considers Merrick Media, the investment firm that owns 16 percent of Tribune Publishing and is led by Tribune Chairman Michael Ferro, a shareholder affiliated to Tribune Management.
Tribune Publishing said in a statement late on Thursday: "While precise results of the vote count are not available at this time (and Gannett had no reliable basis for the speculative results it published earlier today), it is clear that all Tribune directors were elected by a majority of the votes cast."
Some experts suggested that the extent to which Tribune Publishing shareholders withheld support for the company's board director nominees, even though not overwhelming, could embolden Gannett.
"It is difficult to wage a successful 'withhold' campaign," said Bruce Goldfarb, president and CEO of Okapi Partners, a proxy solicitation firm that is not involved in Gannett's dispute with Tribune Publishing.
"However, in the case of Tribune Publishing, the 'withhold' ratio was really high," said Goldfarb, cautioning that Gannett had not disclosed the criteria by which it declared shareholders to be unaffiliated with Tribune Publishing's management.
Five of eight director nominees received less than 50 percent support, and four of Tribune's largest independent stockholders withheld support from Tribune's director nominees, Gannett said in a statement.
Gannett is now waiting for further reaction from Tribune Publishing and its shareholders before deciding on its next move, according to people familiar with the matter. The publisher of USA Today has threatened to walk away if the outcome of the vote does not sway Tribune Publishing to engage.
Last week, Tribune Publishing offered to sign a nondisclosure agreement (NDA) with Gannett that would allow the two sides to share confidential information that could lead to a deal. However, the two sides have yet to agree on terms of that NDA, according to the sources.
Gannett last month raised its unsolicited offer for Tribune Publishing to $15 per share from $12.25. Tribune Publishing shares declined 1.8 percent to close at $11.38 on Thursday.
Last week, Tribune Publishing accepted a $70.5 million investment from Los Angeles billionaire Patrick Soon-Shiong at $15 per share, making him its second-largest shareholder and giving him a seat on its board. His fund, Nant Capital, did not meet the record date to vote on Thursday.
Oaktree Capital, another major shareholder of Tribune, has been pushing for a deal with Gannett and has urged the company to form an independent board to consider the proposal.
Gannett's withhold campaign had failed to win support from proxy advisory firms, with ISS and Glass Lewis & Co. throwing their support behind Tribune Publishing's directors. While proxy advisers only offer a recommendation, they can be influential in guiding institutional shareholders on how to vote in a contested board election.
Also on Thursday, Tribune Publishing said it would change its name, as of June 20, to Tronc, as part of its rebranding into "a content curation and monetization company focused on creating and distributing premium, verified content across all channels."
The company also said it will be transferring its stock exchange listing from the New York Stock Exchange to the Nasdaq Global Select Market on June 20 under the new ticker "TRNC."