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Proxy firm ISS backs MNG director for Gannett board, rejects two others

May 2 (Reuters) - Shareholder advisory firm Institutional Shareholder Services Inc backed a nominee from hedge fund-owned MNG Enterprises Inc for the board of newspaper company Gannett Co Inc on Thursday, adding a twist in the fight for control of the media company.

Newspaper chain MNG Enterprises made a $1.36 billion offer to acquire Gannett earlier this year, but has been rebuffed by the publisher of USA Today and scores of other newspapers.

The proxy adviser said that support for MNG Enterprises nominee Steven Rossi is warranted, but recommended Gannett shareholders to withhold votes for nominees Heath Freeman and Dana Needleman.

"This approach will ensure that the Gannett board properly considers MNG's offer and other strategic alternatives, while minimizing downside risk should a deal not materialize, which is a concern given financing and other sources of uncertainty," ISS said in a report.

Hedge fund Alden Global Capital LLC controls MNG Enterprises Inc, which owns more than 200 newspapers.

Gannett's annual general meeting, when voting results for the board will be counted, is on May 16. (Reporting by Jessica DiNapoli in New York and Saumya Sibi Joseph in Bengaluru; Editing by Arun Koyyur)