Monday, September 28, 2015

Media General Hit With Spoiler Takeover Bid

Nexstar wants to trump Meredith with rich offer.

Posted By on Mon, Sep 28, 2015 at 10:30 AM

Media General Inc. is suddenly the belle of the ball, albeit without seeming to want to be.

Just three weeks after the venerable Richmond firm made a stock-cash offer of $2.4 billion to buy Meredith Corp., Nexstar Broadcasting Group Inc. has come in with a $4.1 billion offer to pick up Media General, whose stock was trading at $11.15 a share on Friday.

In August, Nexstar privately offered $17 a share for Media General but was turned down, according to the Wall Street Journal. But when the Meredith deal was announced, Media General shareholders thumbed their noses and temporarily dumped the stock -- until rumors came that Nexstar was planning a spoiler, the Journal says.

Nexstar’s deal, announced this morning, is valued at $4.1 billion. It values Media General at $1.85 billion and the deal represents a 30 percent premium over Media General’s stock price on Friday. Nexstar is offering $14.50 a share, including $10 a share in cash and 0.0898 for each share of Media General stock.

Nexstar’s offer not only is richer than the Meredith deal, but also would create a larger media empire. Nexstar has more than 100 television stations in 58 markets covering about 18 percent of U.S. television households, the Journal reports. The combined firm would own or service 162 stations in 99 markets reaching 39 percent of U.S. television homes.

The Meredith deal would involve 88 stations in 54 markets, reaching about a third of television households.

The Des Moines, Iowa, firm also publishes magazines Better Homes and Gardens, Allrecipes, Parents and Shape. In its offer this morning, Nexstar stated that Media General should stay away from print media because of declining advertising revenues and circulation.

Media General has had a rough time with print. It has little experience with magazines and unloaded 63 newspapers, including the Richmond Times-Dispatch, for $142 million and help with $400 million in financing in 2012. The buyer was Warren Buffett’s Berkshire Hathaway.

Under the Meredith deal, J. Stewart Bryan, chairman of Media General and scion of a long-standing Richmond media family, would remain in his post.

It's uncertain what the impact would be locally if the Nexstar deals goes through or whether Media General management would leave Richmond entirely. Also locally, Media General owns WRIC-TV 8.

The Journal reports that Nexstar is banking that shareholder dissatisfaction with the Meredith deal will push Media General to consider Nexstar.

Media General had not comment on the offer Monday morning.

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