Tribune Publishing shareholders voted Friday to approve hedge fund Alden Global Capital’s $633 million purchase of the Chicago-based newspaper chain.
The deal, which Tribune Publishing said is expected to close by Tuesday, will take the company private and add the Chicago Tribune and other major dailies to the Alden portfolio, making the New York-based hedge fund the second-largest newspaper owner in the U.S. behind Gannett.
Tribune Publishing said holders of approximately 81.28% of the shares held by non-Alden stockholders voted to approve the transaction.
The merger’s approval hinged on California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 23.7% of Tribune Publishing’s 36.9 million outstanding shares.
In a statement, a spokeswoman for Soon-Shiong said he had “abstained” from the vote. However, Tribune Publishing officials confirmed that proxy ballots registered to Soon-Shiong had been submitted without the “abstain” box being checked, and those votes were tallied as a “yes” vote.
If a proxy ballot is submitted with no box checked — “for,” “against” or “abstain” — then the ballot is counted as being in support of the board’s recommendation, according to the voting instructions on the ballot. A special committee of the board recommended the sale to Alden.
The Tribune Publishing proxy filed with the Securities and Exchange Commission on April 20 said abstentions are the same as a vote against the merger.
Soon-Shiong stands to collect about $150 million through the sale proceeds of his 8.7 million shares.
“Dr. Soon-Shiong abstained from voting,” said Hillary Manning, a spokeswoman for Soon-Shiong. “For the past several years, Tribune Publishing has been a passive investment, as he has remained focused on the leadership roles he holds across his companies. When he made the investment in 2016, he hoped it would be a pathway to local newspaper ownership in Southern California. In 2018, he and his family were proud to acquire the Los Angeles Times and San Diego Union-Tribune from Tribune Publishing, creating the California Times. Their focus is and will be on the continued rebuilding and revitalization of The Times and Union-Tribune.”
Manning said Soon-Shiong declined to comment beyond the statement.
In addition to the Chicago Tribune, Tribune Publishing owns The Baltimore Sun; the Hartford (Connecticut) Courant; the Orlando (Florida) Sentinel; the South Florida Sun Sentinel; the New York Daily News; the Capital Gazette in Annapolis, Maryland; The Morning Call in Allentown, Pennsylvania; the Daily Press in Newport News, Virginia; and The Virginian-Pilot in Norfolk, Virginia.
Alden, which has built a reputation as one of the newspaper industry’s most aggressive cost-cutters, became Tribune Publishing’s largest shareholder in November 2019 and owns a 31.3% stake. It reached an agreement in February to buy the rest of the company at $17.25 per share. The merger required approval from two-thirds of Tribune Publishing’s other shareholders under Delaware General Corporation Law.
Launched in 2007, Alden owns about 200 publications through an operating company known as MediaNews Group. Its larger newspapers include the Denver Post, San Jose (California) Mercury News and the St. Paul (Minnesota) Pioneer Press.
“Local newspaper brands and operations are the engines that power trusted local news in communities across the United States,” Heath Freeman, Alden’s president, said in a statement. “The purchase of Tribune reaffirms our commitment to the newspaper industry and our focus on getting publications to a place where they can operate sustainably over the long term.”
The hedge fund has come under fire for sweeping layoffs at its newspapers. The flashpoint was the March 2018 news that the Denver Post, which Alden has controlled since 2010, was going to lay off 30 employees in a newsroom that had already shrunk from 250 to fewer than 100 staffers.
The Chicago News Guild, which represents newsroom employees at the Chicago Tribune, issued a joint statement Friday with unions across the Tribune Publishing chain, expressing both disappointment and defiance.
“Today, Tribune Publishing shareholders voted to put profit and greed over local news in our country,” the joint statement said. “While we are saddened by the turn of events, we know that our work over the past year — to build allies in the community and to raise awareness about Alden — is not in vain. Those allies will support us as we fight against Alden to protect local news and the cuts that they will inevitably try to make.”
The merger’s approval ends an effort by Maryland hotel executive Stewart Bainum Jr., who sought funding for an $18.50 per share offer that valued Tribune Publishing at $680 million. The proposal suffered a significant blow last month when Swiss billionaire Hansjörg Wyss abruptly pulled out of the deal.
Bainum, the chairman of Choice Hotels, wanted to own The Baltimore Sun, but was unable to find an equity partner for the Chicago Tribune, according to a source close to the situation.
“While our effort to acquire the Tribune and its local newspapers has fallen short, the journey reaffirmed my belief that a better model for local news is both possible and necessary,” Bainum said in a statement Friday. “Today, my focus remains where it began: in the city of Baltimore and my home state of Maryland. I am busy evaluating various options, all in the pursuit of creating locally-supported, not-for-profit newsrooms that place stakeholders above shareholders and journalistic integrity above all.”
Alden is headed by Randall D. Smith, 78, who made his fortune on Wall Street by investing in distressed companies. Smith holds one of three Alden seats on the seven-member Tribune board. Freeman, 41, a Duke University graduate and the son of an investment banker who represented unions, joined Alden as president at its inception.
Alden’s $633 million offer is fully financed but the hedge fund can use Tribune Publishing’s cash on hand and reserved the right to have the newspaper chain take on up to $375 million in debt to close the deal, according to its equity commitment letter filed with the Securities and Exchange Commission.
Tribune Publishing is debt-free, profitable and has more than $250 million in cash, according to financial statements.
