What: Shares of Tribune Publishing Co (NYSE: TPUB) jumped Monday as Gannett (NYSE:GCI) continued to pursue an acquisition of the newspaper publisher. TPUB shares closed the day up 17.74% while GCI stock closed the day up almost 1%.
So what: Last week, Tribune shares slid after Chairman (and controlling shareholder) Michael Ferro dismissed Gannett's bid once again. However, on Monday, the stock was back on the rise based on reports that Gannett is still interested in acquiring the owner of the Chicago Tribune, Los Angeles Times, and other papers. Nearly half of Tribune's shareholders withheld their votes for Ferro and other directors in last week's election, a seeming rejection of the company's opposition to a deal with Gannett.
Gannett, the country's largest newspaper publisher and owner of USA Today, said last week that it was still "reviewing whether to proceed" with its attempted takeover of Tribune.
Now what: It's clear from the stock's movements over the last few weeks that investors favor a Gannett acquisition. The potential acquirer has offered $15 a share for Tribune, a price that would still offer a substantial premium after today's pop. Ferro has insisted that his larger rival is trying to "steal the company," and has released plans to revamp Tribune as a digital content provider and introduce "machine vision" technology that would allow readers to scan print newspapers electronically.
Before Gannett's bid, Tribune shares were trading at just around $7.50, and had steadily fallen during the last two years. Tribune is seeing revenue decline and, like most traditional publishing companies, is confronted with a challenging competitive landscape as print readership and ad sales dry up. Considering that its shares have nearly doubled thanks to Gannett's interest, Tribune shareholders are right to push for a deal.