Shareholder Suit Calls Trib Co. Stock Buyback 'Suicide Pill'

By: E&P Staff First, Tribune Co.'s $2.4 billion stock repurchase plan earlier in the summer failed to generate the bump in share price management was looking for.

Now, a disgruntled shareholder is suing Tribune in a class-action lawsuit that claims the plan amounted to a "suicide pill" designed to deter suitors and to entrench management.

In a lawsuit filed Tuesday in U.S. District Court in Chicago, Tribune shareholder Frank Garamella accused eight directors -- conspicuously not including three Chandler family representatives -- of hurting shareholders with the buyback plan, and by refusing to entertain offers for the Los Angeles Times.

"The share repurchase plan was designed to and has had the effect of creating a defensive barrier," the suit states. It said the plan was "akin to a 'suicide pill,' that significantly decreases the likelihood that any potential acquirer will make an offer for the company."

Tuesday's suit was yet one more complication for Tribune's board as it prepares for Thursday's meeting to discuss its dispute with the Chandler family interests, who are the Chicago media company's biggest shareholders. It's been widely reported that Tribune Chairman and CEO Dennis FitzSimons will present a plan to unwind two trusts that have uncomfortably bound the Chandlers and Tribune in partnerships with complex tax consequences.

The three Chandler directors opposed the buyback, and are not named in the suit.