Meredith ups the ante in its bid for Media General
Meredith Corp. is not leaving the tussle to acquire multimedia company Media General Inc., which announced today that it has completed negotiations on a competing deal to be acquired by Nexstar Broadcasting Group Inc.
Meredith has offered sweeteners to its proposal, which it is calling a “merger of equals.” On a sour note, the Des Moines-based company has pointed out that regulatory approvals of the Nexstar/Media General tie-up could drag out for several months and delay any financial gains for shareholders.
Meredith said its offer provides Richmond, Va.-based Media General shareholders more than $20 per share in near-term value for a company that would be called Meredith Media General in which Media General shareholders would have 50.2 percent of the stock and Meredith shareholders would have 49.8 percent.
Here are the highlights:
- $3.90 per share in cash at closing for total cash proceeds of approximately $510 million.
- One share of Meredith Media General for each share of Media General, representing an implied pro-forma equity value of $14.94 per share, an offer that would be nine times Media General’s basic gross revenue.
- A contingent value right representing after-tax net cash proceeds from the sale of Media General’s spectrum in the Federal Communications Commission’s upcoming spectrum auction. Media General estimates that its spectrum assets could potentially be worth up to $4.29 per share in after-tax value.
- In addition, the new Meredith Media General would pay an annual dividend starting at $0.68 per share.
Meredith shareholders would receive $14.95 per Meredith share in cash at closing for total cash proceeds of approximately $685 million.
Media General said in a release that under its agreement with Nexstar, each of its shareholders would receive:
- $10.55 per share in cash.
- 0.1249 of a share of Nexstar Class A common stock for each Media General share; and
- A contingent value right for each Media General share entitling Media General shareholders to net cash proceeds as received from the sale of Media General’s spectrum in the FCC’s upcoming spectrum auction.
As of closing prices on Jan. 6, the negotiated transaction reflects a value of $17.66 per share plus the value of the adjusted proceeds from the auction of Media General’s spectrum. Upon close of the transaction, former Media General shareholders would hold approximately 33.4 percent of Nexstar’s outstanding shares.
Under a Sept. 8 agreement to merge with Media General, Meredith has the right to approve any competing offer. To date, it has not agreed to terminate that provision.
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