Stockholders need to OK the tie-up of New Media Investment Group's GateHouse Media and USA TODAY owner Gannett. Could new investments complicate that?
Published 12:23 AM EDT Aug 10, 2019in New Media Investment Group this week after it announced plans to acquire Gannett, the owner of USA TODAY, and create the nation's largest news company by print and digital audience.
But a potential opponent is MNG Enterprises, controlled by hedge fund Alden Global Capital. MNG, which recently failed in a hostile takeover attempt of Gannett, acquired a 9.4% stake in New Media on Thursday and signaled plans to potentially oppose the merger or propose alternatives, according to a public filing Friday.
Executives from New Media and Gannett are expected to hit the road in the coming weeks to meet with investors to explain the merits of the transaction, which is a typical part of the mergers-and-acquisitions process, according to a person familiar with the situation. Thursday's 23.9% increase in New Media's stock was"helpful" to ensuring the deal doesn't get tripped up, said Douglas Arthur, a stock analyst with Huber Research Partners who tracks Gannett. But Arthur said that if the stocks remain on the"same trajectory going down," it could place the deal in jeopardy.
Absent a deal, the two companies would be forced to grapple with continued declines in print advertising without the added heft they believe is necessary to help them compete for digital dollars against online giants like Google and Facebook.Cooperman's moves to increase his stake in New Media suggests he is behind the deal. He acquired an additional 813,910 shares of New Media on Monday at a price of $9.863 and then bought another 171,072 shares on Wednesday at a price of $7.
"The combination of these two companies will have more resources to invest in the transformation," Bascobert said Monday at a Gannett employee town hall, according to a transcript filed with the Securities and Exchange Commission. That'll be made possible in part by an estimated $275 million to $300 million in cost annual savings following the deal, including more than $115 million from"newspaper operations" and more than $70 million from corporate functions and procurement, according to a company presentation.
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