Carl Icahn, a large shareholder in Gannett, has announced plans to nominate two board members to gain a more active voice at the media company as it moves toward separating its publishing assets from the broadcasting and digital business.
The activist investor, which controls about 6.6% of Gannett and is the company’s second largest shareholder, is moving to nominate management consultant Michael Dornemann and former Goldman Sachs managing director Courtney Mather to Gannett’s board. He called for several corporate governance changes, including a promise not to adopt a poison pill without support from shareholders and a provision that would allow holders with at least 10% of stock to call special meetings.
“I have no doubt that the currently combined Gannett, and both the stand-alone publishing company and stand-alone broadcasting and digital company, would benefit greatly from having our representatives on the board,” Icahn said in a letter addressed to Gannett CEO Gracia Martore.
But Icahn lamented that as of the market close on Wednesday, Gannett’s shares are down over 8% from when the company announced its spin off plans in August. He said he believed that was the company’s “failure to adequately explain to investors the capital structure, debt capacity and business strategy for each of the post-spin companies.” He also contended there had been a particular lack of details regarding the publishing business, which includes USA Today, and said his nominees could better help Gannett consider how to structure and communicate the spin off process.
Gannett issued a quick response, saying it was “surprised by Icahn’s aggressive actions,” including the threat to run a proxy contest to force corporate governance changes.
“His overreaching campaign to advance his own agenda will not deter the Board of Gannett from continuing to serve the interests of all of our shareholders,” said Marge Magner, non-executive chair of Gannett’s board.
Over the summer, Gannett said it would split its publishing business, which recorded $3.6 billion in revenue in 2013, from its broadcasting and digital businesses, which recorded nearly $1.6 billion in revenue over the same period. Icahn has supported that move, but said he’s concerned that the board could prevent shareholders from both companies from “realizing the highest value for their shares.”
Gannett said the board would evaluate Icahn’s submission, and later make a recommendation to shareholders.