Gannett adopts ‘poison pill’ to keep tax benefit as COVID-19 continues

Gannett headquarters in McLean, VA.


Gannett headquarters in McLean, VA.

Gannett, the owner of USA TODAY and more than 260 other daily publications, announced Tuesday that its board had implemented a plan to ensure that the company maintains access to about $435 million in tax benefits.

The company adopted what Wall Street calls a “poison pill,” which is a measure aimed at blocking investors from suddenly accumulating a large portion of the company without a board’s blessing.

In this case, Gannett adopted the plan because of a tax law that would significantly reduce its tax net operating loss carryforwards, known as NOLs, if investors owning more than 5% of the company’s stock acquired shares totaling 50% or more.

From a technical perspective, the “shareholder rights plan” involves the declaration of a non-taxable dividend of one preferred share purchase right for each outstanding share of common stock. Those rights can only be exercised if an investor acquires 4.99% or more of Gannett, which the board must now authorize. Existing investors owning more than 4.99% will be “grandfathered in” and will be subject to the rights plan if they acquire an additional 0.5%.


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