By Liana B. Baker
(Reuters) - Shareholder advisory firm Glass Lewis & Co said in a report that Tribune Publishing Co (TPUB.N) shareholders should not heed Gannett Co Inc's (GCI.N) call to withhold votes for Tribune's board nominees at its upcoming annual meeting on June 2.
"We believe Gannett has offered insufficient cause for investors to support its current campaign," Glass Lewis said in the report, which was published on Tuesday and seen by Reuters Wednesday.
Gannett missed the nomination deadline for offering its own slate of directors.
Glass Lewis said in its report that withholding votes is an imprecise way of gauging investor sentiment regarding a deal with Gannett, and that Tribune shareholders have been given very little time to assess the Tribune management turnaround plan announced three months ago.
In response to the Glass Lewis report, Gannett reiterated that shareholders withhold their votes and said it will review whether to proceed with its offer for Tribune after seeing results of the upcoming vote.
Last month, Gannett made an unsolicited takeover offer for Tribune at $12.25 per share in cash, in a deal worth roughly $815 million. It followed up this month with a $15 per share offer for Tribune, worth roughly $864 million.
Glass Lewis said Tribune has made what appears to be a "reasonable engagement effort" with Gannett over its recent takeover offers. It said Tribune's board is well equipped to evaluate or reject bids that seem opportunistic by Gannett or other parties.
Larger proxy adviser Institutional Shareholder Services Inc said during the weekend that it recommends that Tribune shareholders vote for the nominated directors.
In a reminder that not all Tribune Publishing shareholders are happy with the company's decisions, investment manager Towle & Co, which owns a 3.9 percent stake in the company, wrote to its board this week to call on it to engage in talks with Gannett.
"From our view as an unaffiliated shareholder, the Tribune board of directors has abandoned its fiduciary responsibility of maximizing shareholder value," Towle & Co wrote in the letter.
Tribune's second-largest shareholder, Oaktree Capital Group LLC (OAK.N), has also said it also is in favor of Tribune Publishing putting itself up for sale and engaging with Gannett.
Earlier this week, Tribune received a $70.5 million investment from Los Angeles billionaire Patrick Soon-Shiong, who became the company's second largest shareholder, paying $15 per share, the same price that Tribune last offered for the entire company.
Glass Lewis said this investment is likely to attract scrutiny because of its timing and size but said the company is in the early stages of its turnaround and shareholders should give the company time to evaluate the new management and board structure.
Tribune adopted a shareholder rights plan, also known as a poison pill, earlier this month. Glass Lewis said that, while the firm is usually not in favor of poison pills, Tribune's move does not warrant withholding votes from board nominees.
(Reporting by Liana B. Baker in San Francisco; Editing by Bill Trott)