Gannett Co., the largest U.S. newspaper chain, finds itself facing a proxy fight with activist investor Carl Icahn as it deals with plans to split its broadcasting and publishing businesses into separate companies, a report said.
The billionaire, who controls 6.63 percent of Gannett’s stock, is nominating two directors of his own to the company’s board and asking shareholders to approve proposals that would make it easier for someone to take over the company, or apparently either company after the split, the Daily Record said.
“We are surprised by Mr. Icahn’s aggressive actions, including his threat to run a proxy contest to force wholesale changes in Gannett’s corporate governance and dictate the corporate governance of a company whose governance profile has yet to be determined, ” the chairman of Gannett’s board, Marge Magner, said in a press release, the report said.
Gannett announced plans in August to spin off its publishing division, which includes USA Today and 81 daily U.S. newspapers, as a separate company. The other company would be a broadcasting and digital business that operates Gannett’s 46 television stations, including WTLV TV-12 and WJXX TV-25 in Jacksonville, the Record said.
Icahn said in a letter to Gannett CEO Gracia Martore that he supports the spinoff plan, but he doesn’t see it as a final step, according to the report.
“After Gannett completes the spin-off, both the publishing company and the broadcasting and digital company will be comprised of extremely valuable assets, and, as others in their industries look to consolidate, I would not be surprised if either company became the target of a takeover attempt, ” the letter said.
“If this occurs, the shareholders — the true owners of the company — should have the full and only right to decide whether or not to accept the offer, ” it said, according to the Record.
Martore said in the company’s news release that shareholders should be pleased with the current direction of the business, the report said.
“Since the launch of our strategic transformation plan three years ago, we have achieved significant revenue growth and margin expansion. During that same period, we have made attractive acquisitions to execute on our announced strategy, our stock price has more than doubled and total shareholder return has exceeded 265 percent, outpacing the S&P 500 and our peers by a wide margin, ” she said.
Gannett has been planning to complete the spinoff by the middle of this year. Apparently, it would happen after its spring annual shareholders meeting, when stockholders would have the opportunity to vote on Icahn’s proposals, the Record said.