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GANNETT CO., INC.
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April 27, 2019
Gannett Sends Open Letter to Shareholders
Unanimously Recommends that Shareholders Vote FOR ALL of Gannetts Eight Experienced, Engaged and
Independent Director Nominees on the WHITE Proxy Card
McLEAN, VA Gannett Co., Inc. (NYSE: GCI) today sent an open letter to shareholders urging shareholders to vote FOR ALL of the companys highly experienced, fully independent director nominees on the WHITE proxy card in connection with Gannetts 2019 annual meeting of shareholders scheduled to be held on May 16, 2019.
The full text of the letter follows below:
Dear Fellow Shareholder,
At the upcoming Annual Meeting on May 16, 2019, you will make a very important decision regarding the composition of the Gannett board that will shape the future of the company and have a lasting impact on the value of your investment.
In recent weeks, we have appreciated having the opportunity to speak with many of you about our ongoing digital transformation and the progress we are seeing, as well as the efforts by MNG Enterprises, Inc. (MNG), a direct competitor of Gannett, and its majority shareholder Alden Global Capital (Alden) to take control of the company by installing their own directors, officers, colleagues and friends on the Gannett board all while touting an unsolicited proposal to buy Gannett that they cannot finance or close. Now, in a last-ditch, desperate effort, MNG has announced that it is reducing the number of candidates that it is nominating for election to Gannetts eight-member board from six to three.
Importantly, the number of MNG nominees does not matter, as each of the three remaining MNG candidates still has irreconcilable conflicts of interest given each nominees close affiliations with MNG and/or Alden, and cannot be expected to act in the best interests of all Gannett shareholders. Further, MNGs candidates have backgrounds and skillsets that we believe would not be additive to the Gannett board, and, indeed, would reduce the quality of the Gannett board to the detriment of both the company and its shareholders. In contrast, all eight of Gannetts director nominees are FULLY independent and bring broad and diverse backgrounds, professional experience and skills in areas that are critical to Gannetts business and future success. We believe that electing even one of MNGs nominees to the Gannett board would put the value of your investment at risk.
Your vote is very important. We encourage you to protect the value of your investment in Gannett by voting FOR ALL of your boards eight independent nominees on the WHITE proxy card today.
MNGS CANDIDATES ARE HIGHLY CONFLICTED
All of MNGs candidates have clear conflicts of interest, which we believe would prevent them from being able to meaningfully fulfill their duties as Gannett directors:
| Heath Freeman is the president and a founding member of Alden, vice chairman of MNG and chairman of the board of Freds, Inc., where he was appointed to the board pursuant to a Cooperation Agreement between Freds and Alden. |
| Steven Rossi was CEO of MNG until his retirement in November 2017 and currently serves as a director on the Freds board after being appointed to the board pursuant to the same Cooperation Agreement as Mr. Freeman. |
| Dana Goldsmith Needleman is also a director of Freds, as well as a family friend of Mr. Freeman. They have known each other for years prior to Ms. Needleman being hand-picked to serve on the Freds board, including through business dealings, charitable organizations, a shared alma mater and documented social gatherings. Further, Ms. Needlemans spouse represented Alden in real estate dealings, and Ms. Needleman made a sizeable personal donation to one of their alma maters organizations where Mr. Freeman is chairman of the advisory board. In short, it cannot reasonably be concluded that Ms. Needleman has no material relationship with Alden, and she is therefore NOT independent of MNG. |
Because of the significant and concerning conflicts of interest resulting from MNGs candidates affiliations with a direct competitor and/or the controlling owner of a direct competitor, MNGs candidates may face significant restrictions on the company information to which they could have access, meaning they could not benefit from the same information available to Gannetts independent director nominees and would not be able to participate fully in decisions critical to creating value for our shareholders.
MNGS CANDIDATES WOULD REDUCE THE QUALITY OF THE GANNETT BOARD
As part of the boards nomination process this year, the Nominating and Public Responsibility Committee and the full Gannett board reviewed MNGs six proposed nominees, and unanimously concluded that NONE would bring incremental expertise to the board, and indeed would worsen the quality of the board in terms of skills and experience.
Mr. Freeman, Mr. Rossi and Ms. Needleman have nearly no public board experience outside of serving together on the board of Freds, the Alden-controlled regional pharmacy chain. At Freds, they have overseen significant value destruction with Freds stock declining 92% since Alden invested in December 2016, despite Freds operating in a steadily growing market.1 Mr. Freemans only other public board experience was at Emmis Communications Corp in 2010, where he was appointed not due to his qualifications but instead in connection with an Alden agreement to take Emmis private. He resigned a few months later after Alden pulled out of the deal.
In contrast, all of Gannetts independent nominees, including the three nominees MNG is seeking to replace, have a wealth of professional experience and expertise critical to Gannetts operations and digital transformation, including finance, business development and strategic planning, M&A, digital media, journalism, marketing and advertising, technology and human resources. While MNG claims that it wants to focus on Gannetts publishing business, MNG is now attempting to replace three directors on Gannetts board, including two distinguished journalists, Stephen Coll and Larry Kramer, with a hedge fund president, a real estate dealmaker and a propane company manager turned newspaper executive without any background in journalism.
MNGS INTERESTS ARE NOT ALIGNED WITH THOSE OF OTHER SHAREHOLDERS AND
MNGS FALSE AND MISLEADING STATEMENTS SEEK ONLY TO ADVANCE ITS INTERESTS,
NOT THOSE OF ALL SHAREHOLDERS
Contrary to MNGs claims, MNG has NOT demonstrated an ability to position acquired newspapers for long-term profitability. It has been widely documented that MNG has drastically reduced jobs at its newspapers, thereby undercutting the papers ability to produce quality journalism and retain subscribers. Once subscribership falls due to lack of meaningful content, MNG responds with yet more cost cuts, and in some cases, closures of the papers all together.
In addition to MNGs baseless claims of having executed revivals of print newspapers, MNG is intentionally misleading shareholders in its calculations of Gannetts performance and the illusory premium it offers shareholders. Even after Gannett clearly identified flaws in MNGs calculations, MNG continues to make the same claims:
| MNG compares Gannetts 2018 results to a time when Gannett was not even a standalone company and ignores that the companys digital marketing solutions business was built beginning in the second half of 2016, with its contribution to performance only being reflected thereafter. |
| MNG compares Gannetts performance to companies outside its industry peer group and arbitrarily compares the premium of its illusory proposal not to Gannetts unaffected stock price (as would be customary) but instead to the lowest closing price for Gannetts shares in its entire 52-week range, taking advantage of the sharp decline the entire stock market experienced in December 2018. |
GANNETTS NOMINEES ARE COMMITTED TO ACTING IN THE BEST INTERESTS OF
ALL GANNETT SHAREHOLDERS
Your board and management team are executing a multi-year transformation strategy to position Gannett to thrive in a digital future. We are the first to acknowledge that transformations are hard and take time, and that we have more work to do. That said, we are confident that the steps we have taken and are continuing to take provide the best path forward for our company to deliver value in the near term. Our focused strategy to enhance Gannetts growth and profitability is centered around:
| Leveraging our nationwide scale and local presence to expand and deepen our relationships with consumers and businesses; |
| Accelerating organic digital revenue growth through innovative consumer experiences and new marketing and advertising solutions; |
| Pursuing accretive growth through disciplined, selective acquisitions that provide synergies with our customer base and markets; and |
| Aligning costs within our legacy print business in a thoughtful and strategic manner. |
The financial results our strategic initiatives have delivered to date reflect our progress and the potential for Gannetts digital investments to serve as a growth engine for many years into the future. In 2018 alone, Gannett:
| Grew digital subscribers by 46%, bringing total paid digital-only subscribers to over 500,000. |
| Grew ReachLocal revenues by 15%. |
| Grew national digital advertising revenue by 19%, with 75% of USA TODAYs advertising revenue now digital. |
Still, our board regularly evaluates our strategic options to ensure that we are best positioned to deliver value for our shareholders. Indeed, we have publicly stated that we would engage with any party that makes a bona fide, credible proposal that appropriately values the company and is capable of being closed. MNGs illusory proposal continues to fail our test.
VOTE TODAY FOR ALL OF GANNETTS INDEPENDENT, EXPERIENCED
DIRECTOR NOMINEES ON THE WHITE PROXY CARD
While we still have work to do, the fact is that Gannetts USA TODAY NETWORK strategy, digital transformation and focus on client relationships are paying off. Our director nominees have the skills and experience we need to continue to oversee this strategy and make the right decisions to maximize value for all Gannett shareholders. Importantly, all eight of your director nominees are committed to acting in your best interests, and are not beholden to or influenced by any outside entity. The same cannot be said about even one of MNGs candidates.
We believe your vote will impact the value of your investment please vote TODAY FOR ALL of Gannetts eight independent director nominees.
We thank you for your continued support.
Sincerely,
/s/
J. Jeffry Louis, Chairman of the Gannett board of directors
If you have any questions, or need assistance in voting your shares, please call the firm assisting us in the solicitation of proxies:
INNISFREE M&A INCORPORATED TOLL-FREE at 1-877-456-3507
Additional materials regarding the board of directors recommendations for the annual meeting are available on the investor relations page of Gannetts website at https://investors.gannett.com.
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About Gannett
Gannett Co., Inc. (NYSE: GCI) is an innovative, digitally focused media and marketing solutions company committed to strengthening communities across our network. With an unmatched local-to-national reach, Gannett touches the lives of more than 125 million people monthly with our Pulitzer-Prize winning content, consumer experiences and benefits, and advertiser products and services. Gannett brands include USA TODAY NETWORK with the iconic USA TODAY and more than 100 local media brands, digital marketing services companies ReachLocal, WordStream and SweetIQ, and U.K. media company Newsquest. To connect with us, visit www.gannett.com.
Forward-Looking Statements
This communication contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts. The words believe, expect, estimate, could, should, intend, may, plan, seek, anticipate, project and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of our management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Whether or not any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond our control. The matters discussed in these forward-looking statements are subject to a number of risks, trends, uncertainties and other factors that could cause actual results or events to differ materially from those projected, anticipated or implied in the forward-looking statements, including the matters described under the heading Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations in the companys annual report on Form 10-K for fiscal year 2018 and in the companys other SEC filings.
For investor inquiries, contact:
Stacy Cunningham
Vice President, Financial Planning & Investor Relations
703-854-3168
investors@gannett.com
Arthur Crozier / Jennifer Shotwell / Larry Miller
Innisfree M&A Incorporated
(212) 750-5833
For media inquiries, contact:
Amber Allman
Vice President, Corporate Events & Communications
703-854-5358
aallman@gannett.com
Ed Trissel / Nick Lamplough / Tim Ragones
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
1 | Based on Freds closing stock prices on April 18, 2019, and December 21, 2016 (the day prior to the filing of Aldens initial 13D). Market growth source: Euromonitor. Statement based on 13-18 CAGR of 3% for drugstores/parapharmacies in the U.S. |