Friday, September 13, 2013

Investor opposition to $1.5B Belo deal said growing

Pine River Capital Management, which said yesterday it plans to vote against the acquisition, is one of a number of hedge funds that bought up Belo's stock largely after Gannett and the TV company announced the $1.5 billion deal June 13.

These funds plan to vote against the transaction or have significant concerns about its terms, according to The Wall Street Journal, which quoted people familiar with the matter it didn't identify.

The amount of opposition isn't clear, the WSJ says. To be sure, odds the deal will be approved remain in Gannett's favor. Belo shareholders representing 42.5% of the company's voting power have committed support. Two-thirds of all shares outstanding have to vote in favor; votes not cast count against, according to Belo's regulatory filings.

Minnesota-based Pine River disclosed a 6.6% stake in Belo earlier this week.

Some of the opposition stems from what happened to Gannett and Belo stock prices after the deal was announced. GCI agreed to pay $13.75 a share, a 28% premium over Belo's closing price the day before.

But Belo stock has traded as high as $14.51, 5.5% above the sale price since the deal was announced, according to Google Finance. That indicates the market is expecting either another buyer to come in or for Gannett to sweeten its bid.

Disgruntled shareholders also complain Gannett's stock shot up more than 30% after the announcement,  indicating, they say, that Gannett got the better end of the deal, the WSJ says.

Belo closed yesterday at $14.30. GCI closed at $25.23.

If it walked away, Belo would be required to pay GCI a $51.5 million termination fee.

CEO Gracia Martore and Broadcasting President Dave Lougee must marshal the deal through, or risk seeing GCI's stock price tank. GCI closed at $19.85 a share the day before it disclosed its Belo bid. A successful merger also would improve Lougee's chances of succeeding Martore as CEO. She is 61 and he is 54.

Last month in a regulatory filing, Gannett disclosed names of shareholders who have brought lawsuits against the deal.

The deal is worth a total $2.2 billion, including assumption of $715 million in debt.


  1. Jim, see CNBC report. 2 analyst firms that matter, ISS and Glass River have officially endorsed the price as fair, which as I understand it puts the issue to rest. Note how much Belo stock is down today because speculators are bailing.

    1. I'd like to see those recommendations, but they don't turn up on CNBC's site or in a Google search. Do you have a link or something else I can see?

  2. "If it walked away, Belo would be required to pay GCI a $51.5 million termination fee."

    Wow, that would almost cover the Executive Bonus budget this year. Silver Linings, people!!

  3. Gee, havent we aleady seen what happens when a TV guy (dubowbo) runs the organization? Of course, Dickey isnt a viable choice, either.

    1. A key difference now is that with the Belo purchase, and further declines in newspaper revenue, Gannett is going to become much more of a TV company. That would be especially true if the newspaper business got spun off into a separate company run by someone other than Lougee.

  4. That would unlock value for shareholders, but would make too much sense. Gannett has spurned the idea consistently over the years. Then again, Gracia may decide she needs shares in two companies before she rides off into the sunset

  5. So, Belo employee here...

    Most of the commentary is from the press side of the business. What is it like at the Gannett stations?

    1. I also would like to hear much more from the broadcast side, especially now that the number of broadcast employees will more than double with the Belo deal to as many as 5,300.

      Gannett's current worldwide workforce is about 30,000. Of those, about 18,000 are newspaper employees. This doesn't include about 7,000 working for Gannett Publishing Services, which handles printing, distribution and ad artwork/photo toning.

  6. Jim, what I can tell you about the broadcast side is, tight budgets have been the norm for a long time. We have smaller staffs than the other guys and can't compete on big stories. The trend is to MMJ's - multi media journalists who shoot, write and edit their own TV stories, and sometimes run their own live broadcast device as well - a backpack unit that replaces the much costlier live truck. No layoffs but paycuts enacted years ago have not changed. Expect reductions in staff at Belo stations in control room operations and graphics, that are part of remote hubs now.


Jim says: "Proceed with caution; this is a free-for-all comment zone. I try to correct or clarify incorrect information. But I can't catch everything. Please keep your posts focused on Gannett and media-related subjects. Note that I occasionally review comments in advance, to reject inappropriate ones. And I ignore hostile posters, and recommend you do, too."

Note: Only a member of this blog may post a comment.