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Tronc's two largest shareholders boosting stock in newspaper chain

Tronc's two largest shareholders have gone on a buying spree since Gannett walked away from a deal to acquire the Chicago-based newspaper chain.

In multiple transactions during the past six weeks, Michael Ferro and Patrick Soon-Shiong have acquired nearly 2 million shares combined of Tronc's stock at a steep discount to Gannett's last offer for the company, according to Securities and Exchange Commission filings.

Ferro, the company's chairman, spent more than $15 million to acquire 1.3 million shares between Nov. 7 and Dec. 7, at prices ranging from $10.09 to $13.50 per share.

Meanwhile, Soon-Shiong spent $8.1 million to buy nearly 669,000 shares between Nov. 4 and Dec. 8 at prices ranging from $9.48 to $13.49 per share.

As of Thursday, Ferro owned more than 6.5 million shares, or 17.9 percent of Tronc. Soon-Shiong owned about 5.8 million shares, or 15.9 percent.

Both are closing in on a 20 percent ownership limit imposed by the "poison pill" defense adopted by Tronc in May to fend off Gannett's unsolicited bids.

A spokesman for Ferro declined Thursday to comment on the purchases, as did a Tronc spokeswoman. Soon-Shiong was not available for comment Thursday, according to a spokesman.

Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said the acquisitions could be strategic — creating an ownership block to cement control — or simply an investor's bet that Tronc shares will rise in value.

"Usually, buying is not a bad sign," Elson said. "You're buying because you think the asset is going to be worth more."

Gannett ended its six-month pursuit of Tronc on Nov. 1 after banks withdrew financing support to buy the publisher of the Chicago Tribune, Los Angeles Times and seven other major newspapers for an agreed-upon price of $18.75 a share.

Gannett, the McLean, Va.-based publisher of USA Today and more than 100 other newspapers, in April made public an unsolicited $12.25-per-share offer to buy Tronc, then known as Tribune Publishing. Gannett increased its bid to $15 a share in May.

Tronc's third-largest shareholder is Oaktree Capital Management, which advocated for a sale of the company. It holds 4.695 million shares, representing a 12.9 percent ownership stake. The Los Angeles-based investment firm did not respond to requests for comment.

Ferro, a technology entrepreneur who previously owned the Chicago Sun-Times, became chairman of Tronc and its largest shareholder in February when his investment firm, Merrick Ventures, bought 5.22 million newly issued shares at $8.50 each.

In May, Tronc sold 4.7 million newly issued shares at $15 to Nant Capital, a California-based technology investment firm headed by Soon-Shiong.

Tronc adopted a shareholder rights plan on May 9 to discourage Gannett from going directly to shareholders with a tender offer. The so-called poison pill would kick in if Gannett, or any buyer, acquires more than 20 percent of the company's stock; it would dilute the buyer's holdings and make a takeover more expensive.

The shareholder rights plan is set to expire in May.

rchannick@chicagotribune.com

Twitter @RobertChannick

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