Lee Enterprises鈥� second-largest shareholder has demanded the newspaper company reject a purchase offer by Alden Global Capital, calling the hedge fund鈥檚 proposal 鈥渋nsufficient and opportunistic.鈥�
Harris Kupperman of Praetorian Capital on Wednesday took aim at Alden's offer to buy Lee Enterprises for $141 million, which values the company at $24 a share. Kupperman owns 7.3% of Lee鈥檚 shares.
Lee owns the St. Louis Post-Dispatch, the Sioux City Journal and the Omaha World-Herald, among the 24 newspapers it controls in the Midwest. Alden, a hedge fund known for cutting staff and selling assets of newspapers it owns, offered to buy Lee in November. Lee continues to evaluate Alden鈥檚 offer.
鈥淟et me be blunt. I simply do not understand what needs to be evaluated here,鈥� Harris wrote. 鈥淎lden鈥檚 proposed purchase price is clearly insufficient and opportunistic, grossly undervaluing the business.鈥�
Kupperman, in a letter to Lee鈥檚 board of directors, said he would refuse to sell any shares at $24. He believes Lee鈥檚 shares should trade at $100 apiece.
That鈥檚 because Kupperman expects the share price to increase as Lee continues to see gains in its digital business, even as print declines. He cited Lee鈥檚 third-quarter financial report showing that revenue from Lee鈥檚 digital business grew by 48.3% compared to the prior year while digital subscribers grew by 50%.
In an interview with the Midwest Newsroom, Kupperman said Lee did not get enough credit for its rapidly growing business.
鈥淚f Lee remains an independent company, its most valued assets are journalists.鈥�Harris Kupperman, Lee Enterprises shareholder
"You need to protect the newsroom so you can have a product. As a shareholder, I see this being a long-term investment. If you have a quality product, you have more subscriptions and you can hire more journalists,鈥� Kupperman said.
He doesn鈥檛 know if Lee is leaning one way or the other with the sale. He believes the newspaper industry has gone the wrong direction over the past 20 years as it has lost subscribers and cut journalists.
鈥淚t's kind of been unfortunate because you end up with no journalists left and everything gets decided on Twitter,鈥� Kupperman said. 鈥淭hat鈥檚 not the right way to run a democracy.鈥�
Alden did not immediately respond to a request for comment on Kupperman鈥檚 comments.
Kupperman鈥檚 letter adds to the pushback against Alden. Lee on Dec. 3 rejected Alden鈥檚 attempt to nominate three members to the newspaper company鈥檚 board. It also adopted a 鈥減oison pill strategy鈥� that would dilute shares in the event that Alden attempted to force a takeover.
On Tuesday, the union that represents the Alden-owned Chicago Tribune newsroom penned a letter urging Lee to resist Alden鈥檚 purchase proposal.
鈥淭he parasitic hedge fund has earned that title as it sucks out profit, strips away assets and slashes staff at every property it owns,鈥� the letter read. 鈥淥ur newspapers quickly suffered the same fate, with our staffs down by an average of 20% since Alden offered aggressive buyouts within two days of its takeover.鈥�
Lee Enterprises is headquartered in Davenport, Iowa, and
Unions from across Lee鈥檚 newsrooms are also urging Lee to decline Alden鈥檚 offer.
Kavahn Mansouri is the Midwest Newsroom鈥檚 investigative reporter. Follow him on Twitter:
The Midwest Newsroom is an investigative journalism collaboration including , , , and .
