The old Union-Tribune building in Mission Valley in a photo from the "About Us" page of the newspaper's website.
The old Union-Tribune building in Mission Valley. The newspaper moved downtown last week. File photo

The second-largest shareholder of San Diego Union-Tribune owner Tribune Publishing says that passing up a buyout offer from rival publishing company Gannett could “destroy enormous shareholder value.”

In a letter sent to Tribune’s board and filed with the U.S. Securities and Exchange Commission, downtown L.A. investment firm Oaktree Capital Management made clear it wants the board to reconsider selling to Gannett and raised serious concerns about the turnaround plans of new Tribune Chairman Michael Ferro, The Los Angeles Times reported.

The board this month rejected an offer of $12.25 a share from Gannett, which responded this week by raising that offer to $15 a share — a 99 percent premium to Tribune Publishing’s stock price before Gannett went public with its proposal last month.

Oaktree said it is not confident that Tribune, as a stand-alone company, can give shareholders the kind of value offered by Gannett’s offer.

Oaktree owns 14.8 percent of Tribune Publishing’s shares and urged the company’s board  this month to negotiate with Gannett. It took a firmer stance in Wednesday’s letter, according to The Times, pushing for the sale and saying Ferro’s plans for a Tribune turnaround are “preliminary and involve great execution risk.”

Ferro’s plans include ramping up global entertainment coverage and increasing online revenue by using artificial intelligence to suggest stories to readers and keep them on Tribune websites longer, The Times reported. Ferro is Tribune Publishing’s largest shareholder, with a 16.5 percent stake.

— City News Service

Chris Jennewein

Chris Jennewein is Editor & Publisher of Times of San Diego.