Standard General accused Tegna's board of creating "arbitrary deadlines and unnecessary preconditions"
Shares of Tegna (TGNA) are under pressure on Monday after the company said that two of four parties that had made unsolicited acquisition proposals in recent weeks have subsequently informed Tegna that they were ceasing discussions. According to media reports, Apollo Global Management (APO) and Gray Television (GTN) were the two bidders that had been working on due diligence for a potential takeover after submitting offers.
ACQUISITION APPROACHES: In a statement over the weekend, Tegna confirmed that it has received four unsolicited acquisition proposals in recent week, and said that the company and its advisors engaged substantially with two of these parties and provided them extensive non-public due diligence information. These two parties made their proposals shortly before the recent market dislocation due to the COVID-19 pandemic and both subsequently informed Tegna that they were ceasing discussions. The other two parties have not signed confidentiality agreements to enable due diligence and have not delivered any information on financing sources, the company announced.
According to a report by Bloomberg's Nabila Ahmed, one of the parties was Apollo Global Management. Apollo on Friday informed Tegna that it would be halting work on any potential transaction due to the market meltdown caused by the COVID-19 pandemic, according to Ahmed, citing a person with knowledge of the matter. Apollo's move follows a similar decision by rival suitor Gray Television earlier this month, the author added. Both Gray and Apollo had separately been working with Tegna and its advisers on due diligence for a potential takeover after submitting offers. The other two bidders that expressed interest in purchasing Tegna were TV producer Byron Allen and a consortium of Najafi Cos. and Trinity Broadcasting Network, Ahmed noted.
SHAREHOLDERS 'NEED TO HOLD BOARD ACCOUNTABLE': In response to the report on acquisition approaches, Standard General, the largest active shareholder of Tegna, with ownership interest of approximately 9.7% of the company's outstanding shares, said that, "We understand that Tegna's process has stalled because, amid a global emergency and capital markets dislocation, this Board has created arbitrary deadlines and unnecessary preconditions. By their own admission, the company has been unwilling to provide access to information unless suitors first demonstrate certainty of financing. This approach would be off market in any deal environment, and particularly so under current market conditions. The Board's actions appear designed to end this process before it can even begin in earnest. This is just the latest in a troubling pattern of behavior. It should never have come to this, and shareholders need to hold this Board accountable."
PRICE ACTION: In afternoon trading, shares of Tegna have dropped almost 19% to $10.73.