USA Today owner Gannett girds for proxy fight with unwanted suitor

Gannett Co., the owner of USA Today, said Thursday it will scrutinize rejected suitor Digital First Media's nominees to replace more than half the newspaper chain's existing board for potential conflicts.

The 10 current directors unanimously snubbed a $1.36 billion offer from Digital First on Monday, arguing that it undervalues a company using established brands in areas from Detroit to Phoenix and central Florida to ramp up digital news products. The bid was worth $254 million more than the company's previous market value.

Gannett said its board doesn't believe the offer is a credible one and will consider whether Digital First's six nominees "are committed to acting in the best interests of all of Gannett’s shareholders," or are beholden to their backer. All are affiliated with Digital First or its principal shareholder, Alden Global Capital, Gannett said.

Digital First, which holds a 7.5 percent stake in Gannett and previously suggested it might wage a proxy fight to push its $12-a-share offer, said it would ask shareholders to install the six people on the McLean, Va.-based company's board at this year's annual meeting, whose date has yet to be announced. A sweep would give Digital First a majority on the board, enabling it to move forward with a sale.

“The sad reality for Gannett shareholders is the company has no credible plan to attain a $12 per share valuation on its own," Digital First said earlier this week. "Gannett’s 'pie in the sky' hopes for its digital businesses are not believable," it added, "and cannot be counted on" to deliver a better return than the current offer.

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[Gannett is the owner of the Salisbury Daily Times. --Editor]