Alden Sues Lee for Rejecting $141 Million Newspaper Chain Buyout
(Bloomberg) -- Alden Global Capital, the hedge fund that owns the Chicago Tribune and New York Daily News, has sued the Lee Enterprises newspaper chain for rejecting Alden’s $141 million buyout offer earlier this month.
Directors of Lee Enterprises, which owns the St. Louis Post-Dispatch and other newspapers, improperly denied their shareholders a say in the $24-per-share offer, a unit of New York-based Alden said in the lawsuit filed Tuesday in Delaware state court.
Alden said it sued Lee, one of the last independent newspaper publishers in the U.S., because “it was necessary to provide a platform for the company’s stockholders to have their voices heard” about the offer, according to the complaint.
The hedge fund, which has built an empire of big-city newspapers including the Denver Post and Baltimore Sun, is deeply unpopular in the journalism industry because of its reputation for cutting costs to boost profits, sparking protests from reporters and editors who work there.
Representatives of Davenport, Iowa-based Lee didn’t immediately return an email Wednesday seeking comment on the Delaware Chancery Court suit. Lee is incorporated in the state, which is home to more than 60% of Fortune 500 companies.
Lee, which also publishes newspapers such as Buffalo News, Richmond Times-Dispatch and the Tulsa World, rejected Alden’s offer Dec. 9, saying the bid “grossly undervalues Lee and is not in the best interest” of investors. “We remain confident in our ability to create significant value as an independent company,” Lee Chairwoman Mary Junck said in a release.
Alden claims Lee officials should have consulted investors before shooting down its offer and shouldn’t have refused the hedge fund’s bid to nominate three independent directors. Lee’s current board is rife with conflicted directors and their rejection of the offer smacks of “unlawful entrenchment” of existing board members, who seek to protect their “lucrative corporate positions,” Alden said in the suit.
The hedge fund -- which owns 6.3% of Lee’s stock -- has evolved into one of U.S. the largest newspaper owners. In May, Alden completed its $633 million purchase of the Chicago Tribune and its associated newspapers, in a deal decried by journalism advocates.
The case is Strategic Investment Opportunities LLC v. Lee Enterprises Inc., No. 2021-1089, Delaware Chancery Court (Wilmington).
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