A judge has tossed a second lawsuit brought against a Davenport-based newspaper publisher by a hedge fund.
Lee Enterprises officials said a Delaware judge on Friday tossed a lawsuit brought by Alden Global Capital related to its effort to nominate its own directors to the Lee Board of Directors at the publisher’s annual meeting on Thursday, March 10.
Alden, which is in the midst of a hostile takeover bid of the newspaper publisher, had a similar lawsuit blocked in February.
In this second lawsuit, Alden claimed Lee breached its own bylaws that require a majority voting standard, not a plurality standard that the publisher plans to use at the annual meeting. The Delaware Court of Chancery ruled in favor of Lee.
“This is now the second court ruling in less than two weeks rejecting Alden’s desperate efforts to destabilize Lee and push its grossly undervalued proposal to purchase the company,” Lee said in a statement.
In mid-February, Lee officials urged its shareholders to support its three nominees for the board at the company’s March 10 annual meeting. The nominees are Mary E. Junck, Herbert W. Moloney and Kevin D. Mowbray.
Alden said it is urging shareholders to vote “no” on board veterans Ms. Junck and Mr. Moloney.
On Nov. 22, 2021, Alden made an unsolicited bid to take control of Lee for $24 per share in cash. As of late Monday morning, Lee’s stock was listed at $34.25 a share.
The newspaper chain later announced that it may launch a “poison pill” plan that has the goal of making it more difficult and more costly for Alden to get controlling stake of the company. The plan would allow its other shareholders to buy shares at a 50% discount or possibly get free shares for every share they already own. The plan would take effect if Alden gets control of at least 10% of Lee’s stock.
Alden owns about 6.3% of Lee’s stock. The hedge fund says change is needed at Lee because the company has delivered disappointing results since buying all of Berkshire Hathaway’s newspapers in 2020. But Lee has said it is making good progress in growing online ad revenue and digital subscriptions.
Alden has a reputation for deep cuts and selling off real estate and other assets at papers it owns.
Lee Enterprises owns 77 daily newspapers across the nation, including the Quad-City Times, The Dispatch-Argus and Muscatine Journal in the Quad Cities region.
