(Bloomberg) -- Tegna Inc.’s third-biggest shareholder nominated four directors to the broadcaster’s board after its push for the company to explore strategic alternatives, including a sale, was stonewalled.
Standard General LP, which owns about 9.7% of Tegna, unveiled its slate of directors Wednesday, confirming an earlier Bloomberg News report. Standard General has discussed its views with management but the company has stymied its push for board representation and a call to explore strategic alternatives, according to people familiar with the matter.
“Given Standard General’s substantial investment in Tegna, our expertise in the broadcasting industry, and our focus on driving value for all Tegna shareholders, we strongly believe that Tegna shareholders would benefit from having a representative of Standard General on the Tegna board,” Standard General Chief Executive Officer Soo Kim wrote in a letter to the company’s investors Wednesday.
Standard General’s nominees include Kim, Standard Media Group LLC CEO Deborah McDermott, Marca Global LLC founder Colleen Brown and Ellen McClain Haime, according to a statement.
The New York-based investment firm believes there are several candidates for a takeover or merger with Tegna, the people said. It also thinks the company’s current strategy has failed to explore all the potential opportunities to unlock value, they said.
Standard General had been seeking two Tegna board seats before expanding its slate, the people said. Tegna has 11 directors, according to its website.
Tegna said in a statement its board has had several meetings with Kim and that he had not raised any possible transactions in those meetings. It also said it had evaluated him as a potential board candidate and had “serious concerns” about his prior business and board service. The board unanimously determined that adding him to the board was not in Tegna’s best interest.
It added that it has put three new directors on the board since 2017 and six new directors over the past five years. It said it would evaluate the other three nominees.
“Mr. Kim demanded a board seat for himself but offered no specific ideas to create value -- only statements that if he were on the board, he would have a unique ability to source and execute ‘transformative’ M&A,” Tegna said in a statement. “The board remains open to hearing Mr. Kim’s perspectives on Tegna’s business as a major shareholder.”
Shares of Tegna rose 2.2% to $17.37 at 10 a.m. in New York trading Wednesday, giving the company a market value of $3.8 billion.
Tegna, based in McLean, Virginia, owns 62 television stations and four radio stations across the U.S., according to its website. In August, Tegna said it had drawn takeover interest from private equity firm Apollo Global Management Inc.
Tegna said Apollo had twice approached it about potential transactions, including most recently in June with a proposal to combine Tegna’s broadcasting assets with those Apollo was in the midst of buying. An earlier proposal to acquire the entire company was short on details, including price, Tegna said in a statement at the time.
Apollo closed its purchase of a portfolio of television and radio stations from Cox Enterprises Inc. in December.
Kim said in Wednesday’s letter that Standard General had engaged with Tegna in an effort to reach a consensual solution and was disappointed that its request for board representation was rebuffed.
“This refusal reflects a continued pattern of passivity by the Tegna board in the face of persistent underperformance, a questionable M&A strategy, excessive leverage and, recently, the apparent rebuff of an acquisition proposal at a premium valuation,” he wrote.
Standard General is run by Kim, who co-founded the firm in 2007 after working at Bankers Trust, Och-Ziff Capital Management and Cyrus Capital Partners.
(Updates with company comment starting in paragraph seven. Share price in paragraph 10)
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