Davenport newspaper publisher Lee Enterprises correctly followed its bylaws when it rejected a hedge fund’s efforts to nominate two candidates to Lee’s board of directors.
That’s the ruling of a Delaware Chancery Court on Tuesday, Feb. 15. Vice Chancellor Lori Will wrote that Alden Global Capital missed the deadline for making nominations to the eight-member board. Alden is in the midst of a hostile takeover bid of Lee.
“We are pleased that the Delaware Court of Chancery has affirmed the importance of orderly annual shareholder meetings and confirmed the decision by the Lee Board of Directors to reject as invalid the notice of nominations delivered by Alden,” according to a statement from Lee. “Based on the ruling of the vice chancellor, Lee will not recognize Alden’s nominations, and any proxies submitted, or votes cast, for the election of Alden’s director candidates will be disregarded.”
On Tuesday, Lee officials again 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, however, might continue its efforts to get its candidates on the Lee board. Alden said that it will be filing a proxy statement urging shareholders to vote “no” on board veterans Ms. Junck and Mr. Moloney.
“Holding entrenched board members Mary Junck and Herbert Moloney accountable for their decades of destructive decision making, value destruction and enrichment at shareholders’ expense is important especially given Lee’s poor corporate governance practices and significant underperformance since the acquisition of Berkshire Hathaway’s BH Media Group publications (in March 2020),” Alden stated in the news release issued Tuesday.
“We remain steadfast in our commitment to provide Lee with competent leadership that will improve returns for shareholders and the quality of journalism for readers,” Alden added.
On Nov. 22, 2021, Alden made an unsolicited bid to take control of Lee for $24 per share in cash. As of late Tuesday morning, Lee’s stock was listed at $36.70 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 reportedly has about 6% of Lee stock.
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-QCOnline.com and Muscatine Journal in the Quad Cities region.