By: Mark Fitzgerald
A California judge has refused to stop the go-private deal for Tribune Co. led by Chicago real estate magnate Sam Zell, the company disclosed in a U.S. Securities and Exchange Commission (SEC) filing Thursday.
In an amendment to its tender offer, Tribune said a California Superior Court judge in Los Angeles on Tuesday refused to grant a shareholder’s request preliminary injunction stopping the tender offer until the Chicago media company “takes steps to maximize shareholder values”; removes the allegedly “coercive aspects” of the offer; and discloses “all material information” about the offer to shareholders.
The judge had earlier this month refused a Tribune motion to dismiss the case.
The California litigation essentially began last September when shareholder Frank Garamella in a lawsuit filed in U.S. District Court in Chicago accused eight directors of hurting shareholders with a stock buyback plan, and by refusing to entertain offers for the Los Angeles Times. He did not include the Chandler family representatives on the board because they opposed the buyback.
Garamella argued the plan was effectively a “poison pill” intended to discourage bidders for the company or its properties.
After a judge questioned whether the case belonged in federal court, Garamella withdrew the lawsuit, and in November 2006 filed a similar suit in the California court.
When Zell’s plan to take Tribune private with a leverage ESOP (employee stock ownership plan) was announced by the board this April 2, Garamella amended the complaint to allege company directors breached their fiduciary duty to shareholders by trying to entrench themselves on the board. The lawsuit also alleges this desire to keep themselves on the board is why they rejected other strategic alternatives for the company.