Media General’s recent bid to become the third-largest owner of TV stations in the country has prompted a counteroffer from a larger rival.
The Richmond-based company acknowledged Monday it has received an unsolicited proposal from Irving, Texas-based Nexstar Broadcasting Group to acquire all of Media General’s outstanding stock in a cash-and-stock deal valued at $14.50 per share, or a total transaction value of $4.1 billion.
The offer comes in direct response to Media General’s announcement Sept. 8 that it is acquiring Des Moines, Iowa-based Meredith Corp. in a cash-and-stock deal valued at $2.4 billion.
In a letter addressed to Media General Chairman J. Stewart Bryan III and CEO Vincent Sadusky, Nexstar Chairman and CEO Perry Sook said his company was surprised by the announcement of the Meredith deal, which he said came just two weeks after Media General “summarily rejected” an acquisition offer that Nexstar made privately on Aug. 10.
Sook said his company’s proposal is “far superior” to the Meredith acquisition, which he describes as “ill-conceived.” Nexstar’s proposal, according to the letter, would deliver a premium of 30 percent over Media General’s closing stock price on Sept. 25 of $10.14. Its cash consideration alone is nearly equal to Media General’s current share price, Sook said.
“We have been attempting for many months to enter into substantive negotiations with you regarding a combination of Media General Inc. and Nexstar Broadcasting Group Inc.,” the letter states. “Our board strongly believes that a merger of Media General and Nexstar would be strategically and financially compelling for both of our companies and shareholders.”
In a statement, Media General said it continues to recommend the Meredith merger while the Nexstar offer is reviewed with financial adviser RBC Capital Markets and legal adviser Fried, Frank, Harris, Shriver & Jacobson. The statement said Media General would have no further comment on the proposal until the board has completed its review.
“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,” the company said in the statement, which advised shareholders to take no action at this time.
In acquiring Meredith, Media General said the combined company would be the third-largest owner of major network affiliates, combining its 71 stations with Meredith’s 17 for a total of 88 stations in 54 markets. The deal, which the companies expect to close by next summer, would also include Meredith’s National Media Group, which owns such magazine and online brands as Better Homes and Gardens, Allrecipes, Parents, and Shape.
By comparison, Nexstar says its proposal would create the second-largest company – behind Sinclair Broadcast Group – of major network affiliates and would own, operate, program or provide sales and other services to 162 stations in 99 markets – nearly double the number and reach of would-be Media General Meredith.
“The transaction we are proposing would be a transformational event for both Nexstar and Media General shareholders and would deliver superior, immediate and long-term value to Media General’s shareholders compared with Media General’s proposed acquisition of Meredith,” Sook said in a release on Nexstar’s website.
Nexstar’s financial adviser in the proposal is BofA Merrill Lynch. Its legal counsel is Kirkland & Ellis LLP.
Monday’s announcement saw Media General stock jump nearly three points to a day high of $14.15 before closing at $13.64. Nexstar stock likewise surged to a day high of $47.38 before closing at $43.51, just below its starting price for the day.