In a thorough but annoyingly paginated article, TheStreet.com recaps the story through Wednesday March 22. On Monday, Dr. Soon-Shiong purchased 2 million shares held by activist investor HG Vora for $15 per share. This brought Dr. Soon-Shiong even with Mr. Ferro at just under 25% of shares held. Both Dr. Soon-Shiong and Mr. Ferro were prohibited from acquiring more than 25% under the company’s poison pill. Mr. Ferro’s surprise ouster of Dr. Soon-Shiong combined with the early date for the company’s annual meeting make it impossible for Dr. Soon-Shiong, now free to vote his shares as he wishes, to launch a proxy battle.
This state of affairs did not last long as Mr. Ferro responded yesterday by having the company buy back 3.75 million shares from Oaktree Capital and having the Board increase his share limit to 30%, while leaving Dr. Soon-Shiong’s 25% limit in place. Dr. Soon-Shiong, who is still Vice Chairman has been excluded from Board discussions.
In a statement, a spokesman for Dr. Soon-Shiong said his client “was surprised to learn” that Tronc was allowing Mr. Ferro to increase his stake beyond 25 percent. The spokesman added that Dr. Soon-Shiong’s lawyers intended to “request his contract also be amended to allow his stake to also be increased to 30 percent from 25 percent.”
Dr. Soon-Shiong was not aware of Tronc’s purchase agreement with Oaktree, according to one of the people with knowledge of the matter.
The New York Times reports that Dr. Soon-Shiong believes he is being pushed aside due to his regular objections to Mr. Ferro’s profligate spending.
The purchase of Oaktree’s stake, and Dr. Soon-Shiong’s quick response, are only the latest salvos in the escalating feud between Mr. Ferro and Dr. Soon-Shiong. Dr. Soon-Shiong believes he is being removed from Tronc’s board because he had become a thorn in Mr. Ferro’s side, according to the two people, who insisted on anonymity to discuss private conversations.
Dr. Soon-Shiong had expressed concern at board meetings about how much Mr. Ferro was spending on the use of a private plane — according to a regulatory filing, Tronc spent $2.7 million to sublease an aircraft from Merrick Ventures, Mr. Ferro’s investment firm — at the same time the company was laying off employees and talking about budget restrictions.
Dr. Soon-Shiong was also angered by Tronc’s purchase of nearly $250,000 in tickets for the Chicago Bulls, the Chicago Blackhawks and the Chicago Bears from Merrick, the two people said. He was given the wrong dial-in numbers for board meetings on occasion, one person said, and some meetings were scheduled at inconvenient times and when he was in South Africa.
A lot of drama for the newspaper company with a bad name that was spun out of Tribune Media(TRCO). By the time this fight is finally resolved, will there be any business worth fighting over?
Disclosure: The author holds no shares in any stock mentioned