Media General to Consider Nexstar's $4.1 Billion Bid

Unsolicited offer would create 162-station group September 28, 2015
RICHMOND, VA. and IRVING, TEXAS—Media General this morning confirmed the unolicited $4.1 billion acquisition offer from Nexstar Broadcasting, and said it would think about it and get back to shareholders.

“Consistent with its fiduciary duties, the Media General board of directors, in consultation with its legal and financial advisors, will carefully review and consider the proposal to determine the course of action that it believes is in the best interests of the company and its shareholders. Media General shareholders are advised to take no action at this time. Media General will have no further comment on the proposal until the board has completed its review,” the broadcaster said.

Nexstar announced its intention Monday morning, offering “Media General (NYSE: MEG) $10.50 per share in cash and a fixed ratio of 0.0898 Nexstar shares per Media General share. The proposal, currently valued at $14.50 per Media General share, was submitted today in a letter to the Media General Board. It represents a premium of 30 percent to Media General’s closing stock price on Sept. 25.”

The price, Nexstar said, “represents an enterprise value multiple of approximately 9.1x Media General’s projected blended 2015-16 EBITDA based upon analysts’ consensus estimates, which compares favorably with both precedent transactions and trading multiples in the broadcast sector.”

The overture comes about two weeks after Media General agreed to merge with Meredith in a deal valuing Meredith at $2.4 billion, and creating a group of 88 TV stations in 54 markets reaching 30 percent of U.S. TV households. Nexstar urged Media General to abandon the “ value-destructive” merger with Meredith and come away with Nexstar.

A combined Nexstar and Media General, it said would comprise 162 TV stations in 99 markest reaching 39 percent of U.S. TV households—just under the national cap established in 2003 to accommodate the reach of stations owned by News Corp., and at the time, Viacom. Just seven markets would have overlap; three in the top 10. Nexstar projected pro-forma annual combined free cash of $450 million, averaged over two years, that would be reinvested in the business and used to pay down debt.

Media General said it “continues to recommend the proposed transaction with Meredith.”

RBC Capital Markets is acting as financial adviser to Media General and Fried, Frank, Harris, Shriver & Jacobson LLP is acting as its legal counsel. BofA Merrill Lynch is acting as financial advisor and Kirkland & Ellis LLP is acting as legal counsel to Nexstar in connection with the proposed transaction.

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