Activist investor Carl Icahn has expressed his intention to obtain two seats on the Gannett Co., Inc. (NYSE:GCI)’s board in an effort to counter expected measures that will insulate the board from potential takeover bids after Gannett splits into two separate entities. A copy of Icahn’s public letter to the Gannett board was disclosed in a filing with the U.S Securities and Exchange Commission this morning.
Carl Icahn’s Icahn Capital LP has a 6.63% activist stake in Gannett Co., Inc. (NYSE:GCI), owning 14.99 million shares of their common stock, making them the second largest private shareholder after Vanguard Group. Icahn Capital also has notable activist stakes in eBay Inc (NASDAQ:EBAY), with 45.83 million shares, and Hertz Global Holdings, Inc. (NYSE:HTZ), with 38.80 million shares. As with Gannett, Icahn pushed eBay to split into two separate businesses by spinning out their PayPal division, which they eventually agreed to.
Icahn, who regularly takes activist positions in companies and makes aggressive moves to affect change in them, first acquired his activist position in Gannett Co., Inc. (NYSE:GCI) during the third quarter of 2014, purchasing over 12 million shares during the quarter. At the time, Icahn planned a campaign to have Gannett split into separate print and broadcasting businesses, though Gannett beat Icahn to the punch and announced their decision to do so before he had undertaken any discussions with the board. In spite of that, Icahn made clear his intentions to have discussions with the board over how the breakup would be handled, and their corporate governance.
In his letter to the board, Icahn expressed concern over decisions he feels the board may make now that could prevent the sale or takeover of one or both of the new divisions to interested buyers; moves that he feels could maximize shareholder value. In response, Icahn announced his intention to seek the adoption of several provisions at Gannett Co., Inc. (NYSE:GCI)’s annual shareholder meeting.
Among the proposals are provisions that would not allow the board to adopt a “poison pill” without the consent of a majority of Gannett Co., Inc. (NYSE:GCI)’s shareholders unless in the case of a hostile tender offer; a provision that would prevent the board from approving a new board structure without the consent of a majority of shareholders; and a provision permitting the holders of at least 10% of Gannett’s shares to call special shareholder meetings.
In the letter, Icahn also nominated to Gannett Co., Inc. (NYSE:GCI)’s board, both Michael Dornemann and Courtney Mather, the former with 30 years of experience in corporate media development and consulting, the latter a former Goldman Sachs employee with a deep knowledge of finance, and experience in handling mergers and acquisitions. Icahn pointed out that Gannett’s stock is down 8% since the spinoff was announced, and that he believed part of that is due to a lack of transparency and failure to adequately detail their strategies for each of the new companies post-split.
Gannett Co., Inc. (NYSE:GCI) responded to the letter in a press release this morning, with non-executive chairman of the Gannett board, Marge Magner, expressing surprise at Icahn’s “aggressive actions”, and his attempts to exert control over the corporate governance of a company whose governance has yet to be set. She called Icahn’s actions an “overreaching campaign to advance his own agenda”, and declared that the board would not be deterred in their efforts to serve the interests of all of Gannett’s shareholders.
Gannett Co., Inc. (NYSE:GCI)’s president and CEO Gracia Martore also said that Gannett is a “shareholder-focused company that has consistently delivered strong returns for our owners”, and their board has been instrumental in their current transformation, including initiating the split Icahn himself advocated.
Other funds with large stakes in Gannett Co., Inc. (NYSE:GCI) include John W. Rogers’ Ariel Investments with 6.07 million shares as of September 30, Ric Dillon’s Diamond Hill Capital with 5.06 million shares, and Jim Simons’ Renaissance Technologies with 1.08 million shares.
Disclosure: None
