(Bloomberg) — Alden Global Capital declared victory in its monthslong effort to acquire Tribune Publishing Co. following a shareholder vote on the hedge fund’s bid for daily newspapers in Chicago, New York and other major cities.
“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,” Alden President Heath Freeman said in a statement Friday.
Tribune said in a statement that 81% of shares held by non-Alden stockholders voted to approve the agreement, giving it more than the two-thirds required. Chairman Philip G. Franklin called the results “an important milestone in completing the transaction.”
Newspapers have struggled to compete with online media and have seen advertising and subscribers shrink, leading to consolidation, job cuts and financial distress for publishers like Tribune. Alden, known for cutting costs in newsrooms, already owns the Boston Herald, Denver Post and San Jose Mercury News through its Digital First Media chain.
The hedge fund holds a 31% stake in Tribune. It agreed in February to pay $17.25 a share, or almost $460 million, for the stock it didn’t already own.
Tribune’s No. 2 shareholder, Los Angeles billionaire Patrick Soon-Shiong, abstained from voting his 24% stake.
A spokeswoman for Soon-Shiong announced his decision Friday, saying the entrepreneur and his family always viewed Tribune as a passive investment and were more focused on their ownership of the Los Angeles Times and San Diego Union-Tribune. “They remain honored to be entrusted with these storied news organizations and continue working to secure their longevity,” the statement said.
But that abstention amounted to approval, according to the Chicago Tribune. Tribune Publishing officials said ballots registered to Soon-Shiong failed to check any box and were counted as a “yes” vote. They would have been counted as “no” votes if the abstain box had been checked.
Tribune journalists fought the sale to Alden and tried to find alternative buyers for each of the company’s newspapers, including the namesake Chicago Tribune, the New York Daily News and other big-city publications.
“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,” the journalists’ union said in a statement.
In early April, Tribune agreed to talks with a rival investor group led by Stewart Bainum that was offering $18.50 a share. Tribune journalists supported Bainum’s bid, but the company ended their discussions after the group’s largest investor, Swiss billionaire Hansjoerg Wyss, dropped out.
In a statement, Bainum said we was “deeply grateful to the journalists, readers, and civic-minded investors who teamed with us to help rescue, re-imagine and reinvigorate local journalism.”
“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.
He added that he’s “evaluating various options” to create “locally supported, not-for-profit newsrooms that place stakeholders above shareholders and journalistic integrity above all.”
In February, when Tribune agreed to be acquired by Alden, Bainum was initially part of that purchase, with a side deal that allowed him to buy the Baltimore Sun and smaller newspapers in Maryland.
But Bainum and Alden disagreed over how they would share services before the Maryland newspapers were fully independent of Tribune, and Bainum grew skeptical of Alden’s intentions in the deal, people familiar with the situation said in March. That led Bainum to pursue an acquisition of the whole company.
Shares of Tribune were little changed at $17.19 in New York.
(Adds Tribune’s comment in third paragraph.)
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