LEE - Lee Enterprises Inc. (LEE) - The Court Delivers A Big Win

Court rules in favor of Lee. A Delaware Court of Chancery ruled in favor of Lee Enterprises not to nominate the Alden Group's Directors to Lee's board. The Vice Chancellor indicated that Lee's board acted reasonably. The ruling allows the company to disregard Alden's director nominations.No proxies, no votes. As a result, Lee will disregard proxies or votes in favor of Alden's nominees at Lee's Annual Meeting of Shareholders on March 10.An uphill battle for Alden. Alden, in response to the ruling, announced that it will be filing proxy materials to commence a "Vote No" campaign against two directors, Mary Junck and Herbert Moloney III. We believe that those efforts likely will fail given that both executives are highly respected in the publishing industry. Alden takeover likely will fail. We believe that the ruling is a significant setback for the Alden Group. In addition, this should allow Lee management to re-energize their efforts from the proxy battle toward managing the company's digital growth initiatives. In our view, those growth initiatives will improve shareholder value. Rating Outperform. Near current levels, the LEE shares trade at 7.0 times EV to our estimated 2022 EBITDA, compared to a peer group mean of 9.4 times. Our price target of $50 represents a target EV/2022 EBITDA multiple of 7.9 times. In our view, the LEE shares are deserving of a enhanced multiple given its attractive, growth oriented digital businesses, which appear to be growing faster than many of its peers. Read More >>