ISS Acknowledges Need for Change at Gannett
and Recommends Shareholders Vote on the BLUE Proxy Card
ISS Notes that "GCI's Digital
Transformation Has Yet to Bear Fruit" and Acknowledges "Execution
Risk" in the Board's Standalone Plan
MNG Urges Shareholders to Vote for ALL THREE
of its Nominees to Ensure There is Adequate Catalyst for Change on
Gannett Board
ISS Says MNG Offer “Makes Sense” For GCI
Shareholders and Should be Considered Properly
MNG Enterprises, Inc. (“MNG”), owner and operator of one of the
largest newspaper businesses in the U.S., today announced that
Institutional Shareholder Services (ISS), a leading independent
proxy advisory firm, has recommended that shareholders of Gannett
Co., Inc. (NYSE:GCI) (“Gannett” or the “Company”) vote on the BLUE
proxy card and support the election of Steven Rossi to Gannett’s
Board of Directors at the Company’s upcoming annual meeting of
shareholders on May 16, 2019.
ISS analyzed detailed presentations and met with both sides to
hear their positions and considered, among other things, Gannett’s
significant underperformance experienced under its current Board,
the Gannett Board’s failure to engage with MNG on its $12 per
share, premium, all-cash offer, as well as the potential benefits
of having an MNG nominee on the Gannett Board. To follow the ISS
recommendation, Gannett shareholders should VOTE ON MNG’s BLUE
PROXY CARD.
In response to the report, MNG stated the following: “The ISS
report echoes what MNG has been saying all along – that Gannett has
underperformed, that its digital strategy has yet to bear fruit and
may never do so, and that Gannett needs a catalyst for change on
its board and should properly consider MNG’s offer or other
strategic alternatives. However, we believe it is imperative that
Gannett shareholders vote for all three of MNG’s nominees to ensure
the Gannett board act now to maximize value.”
MNG continued: “We appreciate that ISS recognizes the
significant shortcomings of Gannett’s entrenched Board. The best
way for Gannett shareholders to effect change is to vote for the
three MNG nominees on the BLUE card. Without the additional new
perspective of MNG’s three nominees, shareholders continue to have
significant risk that Gannett will remain on its path towards
complete value erosion and will continue to spurn MNG’s offer and
potentially other value maximizing opportunities.”
Importantly, in reaching its conclusion that Steven Rossi should
be elected to the Gannett Board, ISS noted the following in its
report1:
- MNG’s Premium, All-Cash Offer
Provides an Attractive Exit for Shareholders of an Underperforming
Company.
“The offer, at face value, makes sense for
GCI shareholders. It would provide an exit – at a premium to
historical valuations – from a company that has thus far been
unable to realize profitable growth in its ongoing multi-year
digital transformation, and that will face enhanced execution risk
as it navigates a CEO transition and continued industry pressures
in the immediate future.”
- Gannett’s Digital Transformation Has
Yet to Bear Fruit and There is Execution Risk in a Standalone
Plan.
“Moreover, it is worth noting that GCI's
digital transformation has yet to bear fruit, as evidenced by the
fact that ReachLocal has had operating expenses in excess of
revenue every year since FY2016, while the publishing segment's
operating income and operating margin have declined since 2016
(despite digital sources accounting for a larger proportion of the
segment's revenue mix) – these factors, along with the earnings and
revenue miss in February, suggest that there is execution risk
inherent in the standalone plan.”
- Gannett’s Earnings Were Lackluster
and There May Be Downside to its Trading Price.
“On Feb. 20, 2019, GCI disclosed financial
results for Q4 and full-year FY2018. The figures included results
that fell short of earnings and revenue estimates, which likely
contributed to the 5.6 percent decline in GCI share price on that
date. These results and the accompanying share price decline,
coupled with the median share price decline experienced by peers
since the unaffected date (14.4 percentage points below GCI over
the period), suggests that there may be downside risk to GCI's
trading price.”
- Gannett Concedes that $12/share Is
Adequate to Start Discussions.
“During discussions with ISS, GCI stated that
$12.00 per share would be a reasonable starting point for
discussions if the offer was credible. Thus, the adequacy of the
offer as an initial starting point is not at contest – the below
information is instead provided primarily for context and to assist
the reader in better understanding the evolution of GCI's financial
performance against the backdrop of its digital transformation and
the headwinds facing the industry.”
- The Presence of an MNG Nominee on
the Gannett Board Will Help Ensure that Gannett Properly Considers
MNG’s Offer.
“Support FOR Steven Rossi, the dissident
nominee with the most relevant industry experience, is warranted.
This approach will ensure that the Gannett board properly considers
MNG’s offer and other strategic alternatives, while minimizing
downside risk should a deal not materialize, which is a concern
given financing and other sources of uncertainty.”
“What the Gannett Board needs right now is new perspectives and
a shareholder orientation – MNG’s three nominees have the
experience required to steer Gannett to a profitable and
sustainable future. We continue to urge Gannett shareholders to
vote on the BLUE proxy card FOR the election of MNG’s three highly
qualified director nominees to bring measured change to Gannett’s
Board and act to maximize value for all shareholders.
“MNG is pleased that ISS took time to carefully examine our
engagement with Gannett and supports our compelling case for
change. That said, we believe that Heath Freeman and Dana Needleman
also deserve Gannett shareholders’ support because they provide a
shareholder orientation, fresh perspective and the experience
required in newspaper turnaround and real estate optimization to
steer Gannett to a profitable and sustainable future. We encourage
all shareholders to review our materials at www.SaveGannett.com to
understand more about why MNG’s nominees are well-positioned to
Save Gannett. We urge all shareholders to VOTE THE BLUE CARD “FOR”
ALL THREE OF MNG’s independent slate of Director Nominees.”
Your vote is important, no matter how many
shares you own!
Please remember NOT TO RETURN the company’s WHITE PROXY CARD! If
you return a WHITE Gannett proxy card – even by simply indicating
“withhold” on the Company’s slate – you will revoke any vote you
had previously submitted for the MNG nominees on the BLUE proxy
card.
Moelis & Company LLC is acting as financial advisor to MNG.
Akin Gump Strauss Hauer & Feld LLP and Olshan Frome Wolosky LLP
are serving as its legal counsel. Okapi Partners LLC is acting as
MNG’s proxy solicitor.
About MNG Enterprises
MNG Enterprises, Inc. is one of the largest owners and operators
of newspapers in the United States by circulation, with
approximately 200 publications including The Denver Post, The
Mercury News, The Orange County Register and The Boston Herald. MNG
is a leader in local, multi-platform news and information,
distinguished by its award-winning original content and high
quality, diversified portfolio of both print and local news and
information web sites and mobile apps offering rich multimedia
experiences across the nation. For more information, please visit
www.medianewsgroup.com.
Additional Information
MNG Enterprises, Inc., together with the other participants in
its proxy solicitation (collectively, “MNG”), have filed a
definitive proxy statement and an accompanying BLUE proxy card with
the Securities and Exchange Commission (the “SEC”) to be used to
solicit votes for the election of MNG’s slate of highly-qualified
director nominees at the 2019 annual meeting of stockholders (the
“Annual Meeting”) of Gannett Co., Inc. (the “Company”).
Stockholders are advised to read the proxy statement and any other
documents related to the solicitation of stockholders of the
Company in connection with the Annual Meeting because they contain
important information, including additional information relating to
the participants in MNG’s proxy solicitation. These materials and
other materials filed by MNG in connection with the solicitation of
proxies are available at no charge on the SEC’s website at
www.sec.gov. The definitive proxy statement and other relevant
documents filed by MNG with the SEC are also available, without
charge, by directing a request to MNG’s proxy solicitor, Okapi
Partners LLC, at its toll-free number (888) 785-6668 or via email
at info@okapipartners.com.
1 Permission to quote from report was neither sought nor
obtained.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190502005505/en/
MEDIA:ReevemarkPaul Caminiti / Hugh Burns / Renée
Soto+1 212.433.4600MNGInquiries@reevemark.com
INVESTORS:Okapi Partners LLCBruce Goldfarb/Pat
McHugh+ 212.297.0720info@okapipartners.com
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