Lee Enterprises rejects hedge fund takeover bid

Newspaper publisher Lee Enterprises has rejected a takeover offer from the Alden Global Capital hedge fund that is one of the largest newspaper owners in the country with a reputation for intense cost cuts and layoffs.

Lee said Thursday that its board unanimously rejected Alden's offer to buy the company for $24 per share, or about $141 million, because it isn't in the best interests of shareholders.

Based on total circulation, Davenport-based Lee is the third-largest owner of newspapers in the United States, with major holdings in St. Louis, Buffalo, N.Y., Omaha, Madison, Wisc., and Tucson, Ariz.

In addition, it owns 10 newspapers in Iowa, including the Waterloo-Cedar Falls Courier, Quad-City Times and Sioux City Journal, and has a sharing a news-sharing arrangement with The Gazette.

Also on Thursday, Lee reported $5.3 million fiscal fourth-quarter profit this year, rebounding from a $1.3 million loss a year ago, as the number of digital-only subscribers at the company grew 65% to 402,000.

“The Alden proposal grossly undervalues Lee and fails to recognize the strength of our business today, as the fastest-growing digital subscription platform in local media, and our compelling future prospects,” Lee Chairman Mary Junck said.

When it made its offer last month, New York-based Alden said it already owned more than 6 percent of Lee's stock.

Alden didn't immediately respond to Lee Thursday morning.

After Alden made its unsolicited bid, Lee adopted a “poison-pill” plan that would make it more expensive for Alden to buy up Lee's shares once it owns more than 10 percent of the company.

Lee also rebuffed Alden's attempt to nominate three new directors to the company's board.

At that stage, the shareholder rights plan that Lee adopted would allow its other shareholders to buy shares at a 50 percent discount at that point or possibly get free shares for every share they already own.

Alden has scooped up newspapers across the country through a series of acquisitions in recent years, including the purchase of Tribune's papers earlier this year.

Lee’s stock jumped 12 percent, to $28 a share, Thursday morning.