DallasNews Corporation (Nasdaq: DALN), the holding company of The Dallas Morning News and Medium Giant, today announced that its board of directors, following consultation with the company’s legal and financial advisers, reviewed and rejected the unsolicited, non-binding proposal received on July 22 from MNG Enterprises, Inc., an affiliate of Alden Global Capital, to acquire all of the issued and outstanding shares of the company’s common stock at a price of $16.50 per share in cash (the “Alden Proposal”).
As previously announced, on July 9, DallasNews entered into a definitive agreement (the “Hearst Merger Agreement”) with Hearst, one of the nation’s leading information, services and media companies, pursuant to which Hearst agreed to acquire all of the issued and outstanding shares of the company’s common stock at a price of $14.00 per share in cash. Concurrently with execution of the Hearst Merger Agreement, Robert W. Decherd, who, collectively with his affiliates, controls more than 96% of the voting power of the company’s Series B common stock and more than 50% of the combined voting power of the company’s Series A and Series B common stock, entered into a voting and support agreement with Hearst (the “Voting Agreement”), pursuant to which Decherd and his affiliates agreed to vote (i) in favor of, among other things, the approval of the Hearst Merger Agreement and (ii) against, among other things, proposals for alternative transactions, such as the Alden Proposal, for so long as the Voting Agreement is in effect.
Following public announcement of the Alden Proposal, Decherd publicly confirmed his intent to honor the Voting Agreement and vote in favor of approval of the Hearst Merger Agreement, and stated that there is no scenario in which he will vote in favor of a sale of the company to Alden or its affiliates. Without Decherd’s voting support, the transaction contemplated in the Alden Proposal cannot be consummated. In addition, Alden’s own public statements describe its proposal as “a non-binding expression of interest only” that “does not constitute an offer capable of acceptance.” Accordingly, the board, in consultation with the company’s legal and financial advisors, concluded that the Alden Proposal does not constitute a “Superior Proposal” under the Hearst Merger Agreement and is not reasonably likely to lead to a “Superior Proposal” under the Hearst Merger Agreement.
On July 27, DallasNews and Hearst entered into an amendment to the Hearst Merger Agreement, which, among other things, increased the per share purchase price to be paid by Hearst from $14.00 in cash to $15.00 in cash at the request of the board. The board reaffirmed its recommendation that DallasNews shareholders vote to approve the Hearst Merger Agreement, as amended. DallasNews shareholders are advised that no action is necessary at this time.
In addition, on July 27, the board adopted a shareholder rights plan (the “Rights Plan”) and declared a dividend distribution of one right on each outstanding share of the company’s Series A common stock and Series B common stock. The record date for such dividend distribution is Aug. 7.
The limited-duration Rights Plan was adopted in response to the Alden Proposal and is intended to deter Alden’s efforts to deprive shareholders of the ability to realize the benefits of the transaction with Hearst, which the board believes is in the company’s best interest and offers a substantial premium to company shareholders. In adopting the Rights Plan, the board noted Alden’s track record of rapidly acquiring a significant stake in other public companies, combined with making unsolicited acquisition bids, threatening or initiating proxy fights to replace the board, as well as litigation to achieve its objectives. Accumulations of Series A common stock by individual shareholders or groups could impair or block the requisite approval of holders of Series A common stock necessary to consummate the transaction with Hearst. The Rights Plan is intended to enable the company’s shareholders to realize the long-term value of their investment through completion of the transaction contemplated by the Hearst Merger Agreement.
While the Rights Plan is effective immediately, the rights will be exercisable only if, in a transaction not approved by the board, a person or group acquires beneficial ownership of 10% (or 20% in the case of certain passive investors) or more of the company’s outstanding Series A common stock. Once exercisable, each holder of a right (other than the acquiring person or group) will have the right to purchase, upon payment of the exercise price, with respect to each right, a number of shares of Series A common stock or Series B common stock, as applicable, equal to the exercise price divided by 50% of the then-current market price.
Prior to the acquisition by a person or group of beneficial ownership of 10% (or 20% in the case of certain passive investors) of the company’s outstanding Series A common stock, the rights are redeemable for $0.001 per right at the option of the board.
The Rights Plan has a duration of less than one year, expiring on July 26, 2026. The Rights Plan may also be terminated, or the rights may be redeemed or exchanged, if the company consummates any merger or other acquisition transaction pursuant to an agreement that has been approved by the board prior to any person becoming an Acquiring Person (as defined in the Rights Plan).
A copy of the Rights Plan has been filed as an exhibit to a Form 8-K filed with the Securities and Exchange Commission.
J.P. Morgan Securities LLC is serving as exclusive financial adviser to DallasNews. Haynes Boone is serving as legal adviser to DallasNews.
About DallasNews Corporation:
DallasNews Corporation is the Dallas-based holding company of The Dallas Morning News and Medium Giant. The Dallas Morning News, a leading daily newspaper, is renowned for its excellent journalistic reputation, intense regional focus and close community ties. As a testament to its commitment to quality journalism, the publication has been honored with nine Pulitzer Prizes. Medium Giant, an integrated creative marketing agency with offices in Dallas and Tulsa, works with a roster of premium brands and companies. In 2024, the agency earned top industry recognition, winning an AAF Addy and the AMA DFW Annual Marketer of the Year Award for Campaign of the Year, along with six prestigious Davey Awards. Medium Giant is a wholly owned business of DallasNews Corporation. For additional information, visit mediumgiant.co.
