Following last week’s disclosure that it had acquired a 8.2% stake in E.W. Scripps, Sinclair has filed papers with the Securities and Exchange Commission proposing to buy the Cincinnati-based station group for about $7 a share.
The Sinclair filing also indicated that it has since increased its holdings in Scripps to a 9.9% stake.
Scripps confirmed that it has “received an unsolicited acquisition proposal from Sinclair” and said the company’s board will carefully review and evaluate any proposals, including the unsolicited Sinclair proposal, to determine “the course of action that it believes is in the best interests of the company and all of its shareholders as well as its employees and the many communities and audiences it serves across the United States.”
Sinclair is offering $2.72 in cash and $4.28 in combined company common stock “based on approximately $325 million in estimated synergies and on a 7.0x EV/ EBITDA multiple.” It also reported that the $7-per-share price represents a 200% premium to the Issuer's 30-day volume-weighted average price as of Nov. 6.
Sinclair also told the SEC that the transaction would be executed through a separation of Sinclair’s ventures business and certain corporate infrastructure from its broadcast business, followed by a merger of its broadcast business with Scripps.
The new company would have a market capitalization of about $2.9 billion according to some reports.
Sinclair had previously announced plans for a strategic review of its operations and said it was considering spinning off its ventures business.
If the deal goes through, Sinclair said the new publicly traded parent company would retain Sinclair’s “dual-class structure.”
"The Scripps family would retain voting control of the Issuer's existing debt and preferred stock during an integration period to avoid unnecessary refinancing expenses or covenant disruption," the filing said.
“The combined company would maintain an independent majority on its Board of Directors,“ the filing also said. “Board representation would be proportional to each company's shareholders' ownership in the combined company, ensuring fair and balanced governance, and will include representation from both the Smith and Scripps families. The Scripps family would control the Board of Directors of the issuer of existing Issuer's debt and preferred stock.”
Sinclair also said, “We are confident that under existing rules, including the national cap, the transaction can be completed in a timely manner with limited select divestitures.”
