Media General chooses Nexstar over Meredith, say negotiations will continue
Board of Media General unanimously decides to begin negotiations with broadcast-only company, potentially leaving Meredith, with its print magazine portfolio, left at the alter
The board of directors of Media General, meeting last Friday, has decided to pursue a merger proposal from Nexstar Broadcasting Group. The company had previously announced a deal with publishing giant Meredith, but that deal was soon jeopardized by a competition offer from Nexstar.
The $2.4B Meredith deal would have made Stephen M. Lacy the Chief Executive Officer and President of the new company, to be called Meredith-Media General. But that deal would have made Meredith’s print magazine vulnerable to being sold off or spun off into a new company.
The board of directors at Media General, following the advice of some of its biggest investors, unanimously chose to initiate negotiations with Nexstar.
That doesn’t mean, of course, that this is a done deal, either.
“Media General also informed Nexstar that its Board unanimously rejected the Proposal, as currently constructed, as the Board believes the Proposal significantly undervalues Media General and its prospects,” the board announcement states. In other words, Media General wants the deal to be with Nexstar, but they are holding out for more money.
“We are eager to move forward with discussions with Media General regarding our proposal, while at the same time maintaining our financial discipline. It is evident since our initial announcement that Media General and Nexstar shareholders recognize the compelling strategic and financial value that a Media General-Nexstar combination presents for both companies and our respective shareholders,” said Perry Sook, Chairman, President and CEO of Nexstar. “We are surprised that Media General’s Board considers the value of our proposal to be inadequate today, however, we are willing to engage with them to hear their perspectives. We believe our proposal will deliver superior, immediate and long-term value to Media General shareholders compared with any alternatives available to the company.”
Should a deal be concluded Meredith will be due a a $60 million break-up fee.
Here is Media General’s announcement:
Richmond, VA November 16, 2015 – Media General, Inc. today announced that its Board of Directors, after careful review and consideration, and in consultation with its independent legal counsel and financial advisors, has unanimously determined to engage in negotiations with Nexstar Broadcasting Group, Inc. regarding the non-binding, unsolicited proposal from Nexstar to acquire all of the outstanding common stock of Media General in cash and stock. This followed the Board reaching the determination under the Company’s definitive merger agreement with Meredith Corporation that allows the Company to explore a potential transaction and negotiate with a third party making an acquisition proposal.
Media General also informed Nexstar that its Board unanimously rejected the Proposal, as currently constructed, as the Board believes the Proposal significantly undervalues Media General and its prospects. Among other matters, the Proposal substantially discounts Media General’s standalone growth prospects, ignores the significant asset value embedded in Media General’s excess spectrum that can be monetized via the upcoming Broadcast Auctions, and does not reflect an equitable share of the synergies outlined in the Proposal made by Nextstar. Media General and its advisors intend to engage in private negotiations with Nexstar and note that there are no guarantees that these negotiations will result in a transaction with Nexstar.
Consistent with the terms of the Meredith Agreement, Media General has provided written notice to Meredith of the Board’s determination. As previously announced on September 8, 2015, Media General entered into a definitive merger agreement with Meredith under which Media General will acquire all of the outstanding common stock of Meredith in a cash and stock transaction. The Board of Directors of Media General continues to recommend the proposed transaction with Meredith.
RBC Capital Markets, LLC and Goldman, Sachs & Co. are acting as financial advisors to Media General and Fried, Frank, Harris, Shriver & Jacobson LLP and Weil, Gotshal & Manges LLP are acting as its legal counsel.
NO OFFER OR SOLICITATION
This communication is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.