Sunday, May 22, 2016


May 22, 2016
ISS Does Not Support Gannett’s Withhold Campaign; Says Tribune Board Response “Appears to Be Appropriate” And “Unaffected Market Price May Not Have Fairly Represented Intrinsic Value of Company”
CHICAGO--(BUSINESS WIRE)-- Tribune Publishing Co. (NYSE: TPUB) today announced that Institutional Shareholder Services Inc. (“ISS”), a leading independent proxy voting and corporate governance advisory firm, recommended Tribune shareholders vote “For” the majority of the Company’s directors and not support Gannett’s withhold campaign.
Tribune Publishing CEO, Justin Dearborn, commented, “We are pleased with the ISS recommendation which clearly acknowledges the thorough and appropriate nature of our Board’s response to Gannett and the value potential inherent in the execution of our strategic plan.”
In its report, ISS noted the following with regard to Gannett’s proposal1:
“The current offer of $15.00 in cash per share is a 99 percent premium to the unaffected closing price the day prior to Gannett first making its offer (at that point,$12.25 in cash per share) public. There is reason to believe, however, that the unaffected price may have materially underrepresented the intrinsic value of the company – which is a function of both the assets themselves and the management ability which leverages those assets to create greater value for shareholders.
“This set of facts, in aggregate, might suggest that the board has grounds for declining to engage on an offer with the eye popping premium to market…since the market price itself may not have fairly represented the intrinsic value of the company – let alone its prospects under the revised strategic plan being formulated by its new leadership.
“Whether that bid is in fact sufficiently compelling as a starting point for negotiations is also reasonably in doubt, given that even the improved bid is at or below the median EV/EBITDA multiple at which peers are currently trading. The favorability of the bid compared to the next-best alternative, remaining stand-alone under a new leadership and a new strategy, is also unclear, just three months in. Given these considerations it appears that the target board's response – which has been more extensive than merely saying "no" – appears to have been appropriate, leaving little reason, at this meeting, to believe withholding votes from directors, on the grounds Gannett has argued, is warranted.
“…Tribune's new CEO described a plan that appears to be both well thought-out and a significant departure from the company's previous course…The meaningful improvement in the company's adjusted EBITDA margins in Q1 2016 relative to the same period in 2015 suggests that the current efforts may be more effective than what preceded them.
“…the board – which had clearly been in the process of creating a new strategy, not only by bringing in a new chairman and a new CEO but also by refreshing five of its 8 seats in 2016 alone – has begun to lay out for investors the framework of the new strategy which, it contends, will deliver higher value under its new leadership than what the company's performance under the prior team would have suggested.”
Goldman, Sachs & Co. and Lazard are acting as financial advisors and Kirkland & Ellis LLP is acting as legal advisor to Tribune Publishing.

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