Picture: ISTOCK
Picture: ISTOCK

Washington — A hedge-fund backed US media firm on Monday offered to buy Gannett, the publisher of the top-selling newspaper USA Today.

The $1.4bn offer by newspaper chain MNG Enterprises is the latest sign of consolidation in the print media industry, which has suffered declining profits and waves of layoffs for well over a decade as print readership declines.

MNG, better known as Digital First Media, owns numerous newspapers nationwide and has a reputation for deep cost cutting at the papers it acquires. It offered $12 a share in cash for Gannett, a 23% bump over the closing price on Friday.

In a letter to Gannett's board of directors on Monday, MNG chair R Joseph Fuchs said Gannett had rebuffed his company's prior offers for a "strategic combination" and asserted that company leadership was incompetent.

"Frankly, the team leading Gannett has not demonstrated that it's capable of effectively running this enterprise as a public company," Fuchs wrote. "Gannett shareholders cannot sit by and watch further value erode while the board casts about for a strategy and a leader, especially when there is an opportunity to maximise value right now."

Since the company went public two-and-a-half years ago following a spinoff from the broadcast company Tegna, Gannett's share price has fallen sharply, having lost more than 41%.

Gannett CEO Robert Dickey plans to retire in May.

In a statement on Monday, Gannett said it would review the proposal to decide what is in the best interest of the company and shareholders.

In addition to USA Today, Gannett also publishes The Arizona Republic, The Detroit Free Press and The Des Moines Register, among other newspapers, and says it operates more than 500 digital media products.

MNG, which is controlled by the New York hedge fund Alden Global Capital, has a reputation for buying struggling newspapers and then slashing costs, according to The Wall Street Journal, which first reported the offer for Gannett.

Since acquiring Colorado's Denver Post, Digital First has been locked in confrontation with the staff of that paper, who claim editorial interference and deep staff cuts.

Gannett shares rose as much as 20% to $11.75, their biggest rally in more than three years.