Davenport-based Lee Enterprises is stepping up its battle against a hostile takeover bid, in advance of its annual meeting on March 10, 2022.

Lee on Monday filed definitive proxy materials with the U.S. Securities & Exchange Commission in connection with its 2022 Annual Meeting. The company (which owns The Quad-City Times, Dispatch and Rock Island Argus, and Muscatine Journal) said this year’s meeting is particularly important because in November 2021, a “vulture hedge fund” (Alden Global Capital) made a hostile bid to buy Lee for just $24 per share.

Lee said Monday that this offer “grossly undervalues Lee and represents a 33% discount to the Company’s closing stock price as of January 21, 2022.” To advance its “inadequate, hostile bid, Alden attempted to nominate three hand-selected candidates to replace the members of the Board’s Executive Committee, which includes Lee’s Chairman, CEO and Lead Independent Director,” the company said.

Lee does not believe Alden properly nominated its candidates, an issue that is pending before a court, but “the critical point is this: Lee’s shareholders should want its strong Board leadership to remain in place to ensure any proposal from Alden (or others) is reviewed objectively with an eye on determining what is in the best interest of all Lee shareholders,” the company said Monday.

Lee’s board urges shareholders to protect their investment by voting for all the board’s three nominees using the WHITE proxy card. Along with the definitive proxy statement and annual report, Lee sent a letter to shareholders, which can be viewed here.

The letter is headlined: “A ‘Vulture Hedge Fund’ is Seeking to Acquire Lee at a Steep Discount. Don’t Let it Take Value that Belongs to You.”

“We believe Alden remains set on buying Lee at a deeply discounted price and taking Lee’s upside away from you and the rest of our shareholders,” the letter to shareholders says. It asks for them to vote for the three directors up for re-election – Chairman Mary Junck, President and CEO Kevin Mowbray and Lead Independent Director Herbert Moloney.

Since 2019, Lee added three new independent directors with the aim of “ensuring Lee’s Board has the necessary expertise to help Lee create value for shareholders,” the letter says. “Each of those new directors has experience in digital businesses, including online news and digital media.

“Two of our new directors also have experience evaluating and executing capital markets and M&A (merger and acquisition) transactions, which will help the Board thoughtfully and objectively review any alternative pathway for creating value for our shareholders,” the letter says.

“We believe Alden is targeting our directors as the next step in their campaign to pressure the Company into an unfair transaction that would secure Lee’s upside for Alden alone, at your expense,” the letter says.

Lee rejected offer in December

In early December, Lee’s board 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.

Mary Junck, chairman of the Lee Enterprises board.

“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.”

On Nov. 22, 2021, 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 Tuesday, Jan. 25, (about 1 p.m.), Lee’s stock was trading at $35.81 a share.

Lee owns nearly 350 digital platforms and print publications serving 77 markets in 26 states.