The parent company of Philly.com, the Inquirer and Daily News will be dissolved in a private auction open only to the current owners, a judge in Delaware Chancery Court ruled today.
The auction should be held no later than May 28, the judge said.
The ruling represents a victory for George E. Norcross, III, co-owner of the parent company, Interstate General Media LLC. Norcross has been at loggerheads with owners Lewis Katz and H.F. “Gerry” Lenfest over the direction of the company.
In Delaware, there was no question that the company should be dissolved. The argument came down to how the dissolution would proceed.
Norcross, who owns 54 percent of IGM, had petitioned for the company to be liquidated among the current ownership in an “English-style” auction with escalating bids.
The Katz and Lenfest faction had argued that an open auction with single sealed bids would attract the most bidders and maximize the company’s value.
Donald F. Parsons, vice chancellor of the Court of Chancery for the State of Delaware, said he doubted any auction would attract an outside purchaser.
“I find that the failure of an interested third-party bidder for the Company to materialize in the more than three months since it has been known that IGM is for sale strongly supports the conclusion that a public auction in this case would be unlikely to attract a ‘serious bidder’ beyond [the current co-ownership]," Parsons wrote in his 43-page opinion.
Both Norcross and Katz have pledged to bid at least $77 million for the website and two newspapers. Norcross and Katz initially bought the media company from a group of non-Philadelphia hedge funds for $55 million in March 2012.
The vice chancellor's opinion recounted the recent history of the company, noting that the interest Norcross and Katz had in the website and newspapers when they bought it was "not a purely profit-driven business decision."