Icahn withdraws demands after Gannett details print company rules

Gannett, the media company that owns Paste BN, revealed Monday new corporate governance rules of its publishing unit that will be spun off as a separate company later this year, resulting in the withdrawal of demands by activist investor Carl Icahn.

In January, Icahn, who owns and controls about 6.6% of Gannett shares, wrote a letter to Gannett CEO Gracia Martore revealing his desire to seek two seats on Gannett's board and propose several changes to remove defensive measures against takeover bids that may arise from the company's planned split.

Last year, Gannett announced it'll split itself into two companies. It will keep its broadcasting and digital segments and continue to operate as a publicly traded company with a new name and Martore as its CEO. The publishing segment, which includes Paste BN and 81 other newspapers, will operate as another company that will retain the name Gannett. The new print company will be headed by Robert Dickey, currently the head of its U.S. Community Publishing unit.

Shares of Gannett rose 1.2% Monday to close at $35.84.

In the corporate structure announced Monday, the new print company will elect members of its board of directors annually and allow holders of 20% of the outstanding shares to call for special meetings.

If a shareholder rights plan — also known as a "poison pill," used to ward off takeover attempts — is adopted, it will expire after 135 days unless extended by a majority vote of shareholders. A majority voting standard also will apply to electing uncontested directors. No "supermajority" voting provisions will be adopted unless required by law, Gannett said.

With the new rules in place, Icahn "has withdrawn all of his previously submitted director nominations and proxy proposals," Gannett said.

"The details we are announcing today reflect productive conversations we've had with Mr. Icahn and other shareholders," said Marge Magner, non-executive chairman of Gannett's board, in a statement.

In his letter in January, Icahn demanded that Gannett adopt a provision stating that "the board may not adopt a poison pill" without a majority vote of the shareholders, except in response to a hostile offer. He also demanded that the holders of at least 10% of the shares be allowed to call special shareholder meetings to change the board membership through a majority vote.

"After Gannett completes the spinoff, both the publishing company and the broadcasting and digital company will be comprised of extremely valuable assets, and, as others in their industries look to consolidate, I would not be surprised if either company became the target of a takeover attempt," Icahn wrote in the letter. "If this occurs, the shareholders — the true owners of the company — should have the full and only right to decide whether or not to accept the offer."

In her response, Magner called Icahn's proxy campaign "overreaching" and wrote: "We are surprised by Mr. Icahn's aggressive actions, including his threat to run a proxy contest to force wholesale changes in Gannett's corporate governance and dictate the corporate governance of a company whose governance profile has yet to be determined."

Gannett joins other media companies that have spun off declining publishing businesses to focus on digital media and video. Last year, Time Warner completed spinning off its magazine publishing unit Time Inc. as a separate company.

News Corp was split into two companies in 2013, with its film and TV units grouped into a newly created entity, 21st Century Fox. Its publishing division, which owns The Wall Street Journal and New York Post, retained the old corporate name News Corp.