Denver-based Digital First Media has hired a financial adviser as it seeks to press its $1.4 billion bid for Gannett Co. Inc.
Digital First recently retained investment bank Moelis & Co. for advice on the bid and how to fund it, according to people familiar with the matter. It is also being advised by law firm Olshan Frome Wolosky LLP.
Digital First, a large, closely held media company officially known as MNG Enterprises Inc., publishes the Denver Post, Boulder Daily Camera and several other Colorado daily newspapers.
It already owns about 7.5 percent of Gannett -- publisher of USA Today as well as the Fort Collins Coloradoan -- and roughly three weeks ago offered $12 a share to buy the rest.
Gannet is the nation's largest newspaper publisher based on total circulation; Digital First ranks third.
Gannett shares have risen on hopes of a deal — shares rose to $11.22 Friday in after-hours trading — but the McLean, Va.-based company has yet to respond publicly to the offer.
Gannett, advised by Greenhill & Co. and law firm Skadden, Arps, Slate, Meagher & Flom LLP, has been considering its response to the offer and the newspaper publisher’s board met for several hours Thursday to discuss it, some of the people said.
Meanwhile, Gannett and Digital First have been negotiating a possible meeting to discuss the bid, with Gannett pushing Digital First to come prepared with information that includes how it plans to finance the deal, the people said.
The two sides are considering scheduling a meeting early next week, though there is no guarantee they will ultimately agree to do so.
Gannett has some reservations about Digital First’s ability to gather sufficient debt funding for a deal, given that the offer letter was silent on the matter, some of the people said.
Another potential issue is that Digital First is backed by New York hedge fund Alden Global Capital LLC and together the two have a record of making deep cost cuts at titles they acquire, including the Denver Post, which has seen repeated rounds of staff reductions in recent years and which moved its newsroom out of its downtown headquarters to cheaper space in Adams County as a cost-cutting move.
Digital First’s bid has raised concerns among employees of Gannett-owned publications that have already been hit hard by layoffs, including dozens as recently as last week that had been previously planned.
Digital First has indicated it could launch a proxy fight for control of Gannett’s board, which it would have to do before a nomination deadline of next Thursday — unless Gannett agrees to extend it.
It is possible Gannett will look to strike a deal with another party to avoid an expensive proxy fight or a deal with Digital First, which has encouraged the company to seek other suitors. The Wall Street Journal has reported that Tribune Publishing Co. tried to rekindle merger talks with Gannett before the Digital First bid surfaced.
Digital First had approached Gannett at least twice in the past, including shortly before its public offer. Representatives of the two sides have met in the past, but not in a formal capacity, some of the people said. Digital First said in its letter that those approaches were ultimately rebuffed.
Digital First owns roughly 50 dailies across the country, including the Orange County Register and San Jose Mercury News, and about 150 other titles.
Gannett publishes dozens of local papers such as the Arizona Republic in Phoenix and the Detroit Free Press.