2 Shareholders Sue to Scuttle Pulitzer Deal

By: (AP) Two Pulitzer Inc. shareholders are suing the St. Louis-based publishing company, seeking to unhinge its planned buyout by Lee Enterprises Inc. on claims that the $1.46 billion deal is unfair to Pulitzer stockholders.

Pulitzer, publisher of the St. Louis Post-Dispatch and the Arizona Daily Star, disclosed the Delaware lawsuits in a filing with the Securities and Exchange Commission Thursday, three days after announcement of the deal unanimously approved by the boards of both companies.

Davenport, Iowa-based Lee said it will pay $64 per share in cash for Pulitzer, which also owns 12 other dailies and more than 100 weekly newspapers, shoppers, and niche publications, including the Suburban Journals of Greater St. Louis.

Both companies said they expect to complete the deal, which also includes Lee assuming $306 million of Pulitzer debt, this spring.

Both lawsuits -- one filed Jan. 31 by Todd Veeck, the other two days later by James Fern -- purport to be class-action cases and ask a judge to permanently bar the sale the plaintiffs argue does not maximize shareholder value, Pulitzer's SEC filing said.

The lawsuits, which name Pulitzer and its board, seek unspecified damages.

A message left today for the attorney for the two shareholders, Carmella Keener of Wilmington, Del., was not returned.

Lee spokesman Dan Hayes referred inquiries to Pulitzer, whose spokesman did not immediately return a message.

Pulitzer shares rose a dime to close at $63.70 on Monday on the New York Stock Exchange, near the high end of their 52-week range of $43.71 to $65.89. Lee shares rose 26 cents and closed at $45.31 on the NYSE, near the bottom end of its 52-week range of $43.05 to $49.83.

Pulitzer chose Lee over Gannett Co., the nation's biggest newspaper publisher whose 101 U.S. newspapers include USA Today.

Some analysts have cheered the Lee-Pulitzer hookup as a good match, with A.G. Edwards & Sons Inc.'s Mike Kupinski citing Lee's existing knowledge of Midwest markets as "a well-run company with some of the highest margins" in the industry.

While having expected the selling price to be a bit more than $64 per Pulitzer share, Kupinski last week called the purchase "a fair deal for the shareholders."

Lee and Pulitzer have said the deal would mesh two newspaper publishers with similar cultures and values, beginning with their long histories. Lee is 114 years old and Pulitzer dates to 1878, when Joseph Pulitzer merged the St. Louis Dispatch and the Post. Lee has 44 daily newspapers in 19 states.

Federal antitrust regulators are investigating the deal, the Justice Department has said.

The deal also effectively scuttled a bid by six Post-Dispatch employees who -- worried about prospects of an outside suitor -- had launched an admittedly longshot effort to buy the company through an Employee Stock Ownership Program, under which all workers could share ownership.