MNG Enterprises Welcomes ISS Support for Its Nominee to Gannett Board of Directors
Business Wire 2-May-2019 9:49 AM
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.
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