Davenport-based Lee Enterprises announced Thursday that its Board of Directors has unanimously rejected the unsolicited, nonbinding offer from Alden Global Capital to buy the company for $24 per share in cash.
After careful consideration with its financial and legal advisors, Lee’s Board determined that “Alden’s proposal grossly undervalues Lee and is not in the best interests of the Company and its shareholders,” Lee said in a statement.
“The Alden proposal grossly undervalues Lee and fails to recognize the strength of our business today, as the fastest-growing digital subscription platform in local media, and our compelling future prospects,” said Lee Chairman Mary Junck. “We remain confident in our ability to create significant value as an independent company and are focused on our Three Pillar Digital Growth Strategy, detailed earlier this year. We have demonstrated accelerating momentum across our platforms as we execute our plan.”
“The core of Lee’s strength and competitive advantage is steadfast commitment to high-quality local news that is deeply valued in the communities we serve,” she added. “With a nimble, digital-first mindset, we are leveraging our brands and attractive market position, solid balance sheet, established digital infrastructure and digital marketing expertise, and talented team to drive recurring revenue growth and strong cash flow performance. Our digital transformation is well underway with strong momentum, as shown in our fourth quarter fiscal 2021 results reported today.”
On Nov. 22, Alden — a New York-based hedge fund that has a ruthless reputation for cost-cutting and layoffs at newspapers it owns nationwide — proposed buying Lee for $24 a share, or about $141 million. On Thursday, Lee’s stock price rose 11 percent, to $27.70.
In a separate press release issued today, Lee reported strong fourth-quarter fiscal 2021 results with continued operating revenue and adjusted EBITDA growth driven by 37% growth in digital revenue, 65% growth in digital-only subscriptions and 71% growth in revenues from Amplified, Lee’s full-service digital marketing agency.
For the period ending Sept. 26, 2021, total operating revenue was $193.9 million and net income totaled $5.3 million in the fourth quarter, the company reported.
“Our strong fourth quarter and full year results clearly demonstrate the significant progress we have made since we launched our Three Pillar Digital Growth Strategy in early 2021, positioning us with strong momentum in our digital transformation as we enter 2022,” said Kevin Mowbray, Lee president and CEO.
“Total operating revenue grew for the second straight quarter and totaled $193.9 million, driven by 71% growth in Amplified, our full-service digital marketing services agency, 28% growth in digital-only subscription revenue and 8% revenue growth at TownNews, our SaaS content platform,” he added, “Total digital revenue increased 37% in the fourth quarter and now represents 34% of our total operating revenue.”
In the fourth quarter, subscription revenue totaled $87.8 million, a 1.6% decrease compared to the prior year. Digital-only subscriptions at the end of the quarter totaled 402,000, or up 65% compared to the same period last year.
Total Lee operating revenue for the year was $794.6 million, compared to $618.0 million last year, reflecting the acquisition of BH Media and the Buffalo News. On March 16, 2020, the company closed the acquisition of the newspaper assets of BH Media Group and stock of The Buffalo News, Inc.
Lee’s subscription revenue totaled $357.7 million for the year, a 1% increase compared to the prior year, and total advertising revenue was $369.3 million, a 6% decrease compared to last year on a pro forma basis.
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