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Tribune Publishing Adopts 'Poison Pill' Defense Against Gannett

Tribune Publishing's board has adopted a shareholder rights plan to defend itself against Gannett's unsolicited bid to buy the Chicago-based newspaper company.

The publisher of the Chicago Tribune, the Los Angeles Times and other papers said Monday the plan, commonly known as a "poison pill," would kick in if a group buys more than 20 percent of Tribune Publishing's shares or begins a tender offer to seek a 20 percent stake from existing shareholders.

When the plan is triggered, existing shareholders, other than an acquiring entity, could buy preferred shares at a substantial discount, thereby diluting the stake of any acquiring company and making a takeover more expensive. The plan expires in a year.

Tribune Publishing's adoption of the defense, widely used in hostile takeover battles, follows its formal rejection last week of Gannett's April 12 offer of $12.25 a share to acquire the company in a deal that was valued at $815 million, including the assumption of $390 million in debt.

"Tribune's assets and brands, including the Los Angeles Times and the Chicago Tribune, are worth far more than Gannett's proposal, which is a non-starter," Tribune Publishing Chairman Michael Ferro said in a news release. "We are focused now on supporting our team as they execute on our plan — we are going to support our outstanding journalists who create world-class content — and we are working to create superior value for our shareholders. We recognize that we need to move quickly and we are not going to let this noise from Gannett distract us."

On Friday, Oaktree Capital Management, Tribune Publishing's second-largest shareholder behind Ferro's Merrick Media, said in a regulatory filing that Tribune Publishing should "pursue discussions with Gannett to see if an acceptable agreement can be reached."

In a statement Monday, Gannett said: "It is unfortunate that instead of engaging with Gannett to negotiate a mutually agreeable transaction that is in the best interests of all Tribune stockholders, Tribune is putting up another roadblock to prevent its stockholders from realizing compelling, immediate and certain cash value for their investment. The decision to implement a poison pill is yet another demonstration that Tribune's board and management team are not listening to its stockholders. Gannett continues to believe in the strength of its $12.25 per share all-cash proposal and its ability to advance Tribune's publications and journalism as part of Gannett's USA Today network."

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