New York (CNN Business)Gannett, the nation’s largest newspaper chain, notched an important victory Thursday in its attempt to fend off a hostile takeover bid.
The company, which publishes USA Today, announced that all eight of its board nominees won election based on the results of a preliminary vote. That’s a rejection of Digital First Media’s efforts to win control of Gannett by installing its own board members. Digital First Media, a hedge fund-owned media company also known as MNG Enterprises, has been circling Gannett since the start of the year. Digital First asserts that the newspaper chain has been woefully mismanaged. Gannett (GCI) has resisted the takeover from the start. It said Thursday that the retention of its board nominees shows that shareholders “recognize the continued progress we have made toward our ongoing digital transformation and agree that our strategic plan is the best path to deliver value for all Gannett shareholders.”The company’s directors are “uniquely qualified to oversee Gannett’s achievement of its strategic objectives and transformation plan,” it said in a statement. Read MoreDigital First called the vote “a win for an entrenched Gannett Board that has been unwilling to address the current realities of the newspaper business, and sadly a loss for Gannett and its shareholders.””Gannett’s newspapers are critical local resources, and we hope that Gannett’s incumbent Board and Management shift course to embrace a modern approach to local news that will save newspapers and serve communities,” Digital First said in a statement Thursday. “That would be the best outcome.”If the board doesn’t shift course, Digital First said it believes “the stock will drop further.” Though Gannett’s stock is up roughly 2% this year, it has fallen about 40% since 2015. Digital First mounted its unsolicited bid in January when it tried to acquire Gannett for $12 a share, a roughly 41% premium to its price at the end of 2018. The report made journalists at Gannett’s more than 100 papers anxious, given Digital First’s reputation for imposing deep cuts at its publications, including the Denver Post. Why journalists at the nation's largest newspaper chain are nervousIn a letter to Gannett’s board of directors, MNG said at the time that the “team leading Gannett has not demonstrated that it’s capable of effectively running this enterprise as a public company.” Gannett rejected the takeover bid in February. But there is no denying that the newspaper chain is enduring the same struggles shared by much of the news media industry. A little more than a week before its board unanimously rejected MNG’s bid, Gannett laid off employees in newsrooms across the country.On Thursday, Gannett saluted its “dedicated employees for their commitment and hard work throughout this process.”