Meredith tries to fight back to save deal with Media General
It’s a bit demoralizing to be left at the alter as the groom runs off with another. So it is when a business deal goes sour because another company has stepped in and won the day.
On Friday, the board of directors of Media General met to determine if they would go through their the deal Meredith, or if they would decide to go with the interloper, Nexstar Broadcasting Group. The board on Monday announced their decision: they would start negotiations with Nexstar.
It shouldn’t have come as a surprise, as a couple major investors in Media General publicly said they preferred the Nexstar deal. The deal, after all, would only involve local TV properties, not print magazines.
Meredith yesterday fired back, stating that they still believe the Meredith-Media General deal the better of the two. But it is interesting that in Meredith’s press release the words magazines or publishing does not appear.
Here is Meredith’s answer to Monday’s announcement from Media General:
DES MOINES, Iowa – Nov. 16, 2015 — Meredith Corporation today issued the following statements in response to a determination made by Media General to (1) Reject Nexstar Broadcasting Group’s unsolicited proposal to acquire Media General; and (2) Engage in negotiations with Nexstar regarding its non-binding unsolicited proposal:
- “Meredith understands Media General Board’s fiduciary responsibility to respond to the Nexstar proposal consistent with our binding merger agreement announced on September 8, 2015. However, Meredith still remains confident that the combination of Meredith and Media General will generate superior shareholder value – over both the near- and long-term – as compared to a potential Nexstar transaction.”
- “It is important to remember that our binding agreement to merge with Media General remains in place with fully-committed financing of $2.8 billion; we are making significant progress on achieving key regulatory approvals needed to complete the transaction; our joint integration work has already identified additional synergies; and the Meredith and Media General Boards of Directors continue to recommend the Meredith-Media General transaction.”
- “Under the terms of our binding merger agreement, Meredith will have the opportunity to review – and propose an alternative superior proposal – to a potential agreement Media General might reach with a third-party.”
“Meredith’s Board of Directors still unanimously agrees that the merger agreement reached with Media General as currently structured is in the best interests of shareholders,” said Meredith Chairman and CEO Stephen M. Lacy. “Enhancing Meredith shareholder value will remain our top priority as we move forward in this merger process.”
The new Meredith Media General will be a diversified, multiplatform media company with a strong financial position, unmatched content creation capabilities, deep consumer insights and data, and expansive reach. Its compelling attributes include:
- A powerful competitor in the media industry with $3 billion in revenues, over $920 million of EBITDA, and at least $1 billion in pro-forma cumulative free cash flow in the first two calendar years post-closing.
- At least $85 million of verified synergies, which could climb even higher as the two companies move forward with integration activities.
- More than 80 television stations across 54 markets that reach 34 million U.S. TV households. These high-quality local broadcast assets will include 25 Big Four network-affiliated TV stations in the Top 50 DMAs, making Meredith Media General the largest owner of Big Four stations in Top 50 markets.
- A powerful digital platform reaching more than 200 million monthly unique visitors via a combination of leading national and local consumer sites and business-to-business digital capabilities in key growth sectors such as content, mobile, social, video and native advertising.
- Leading multiplatform national media brands with a top female reach of 100 million unduplicated American women and over 60 percent of U.S. Millennial women across multiple platforms including print, digital, mobile, video and brand licensing. It will also possess a profitable marketing services business.
The new Meredith Media General will also be positioned for long-term growth in the media industry:
- Meredith Media General’s 30 percent TV household reach provides for further expansion in the television space, as it is well below the government-mandated 39 percent ownership cap.
- Meredith Media General will possess a powerful digital business, with projected first-year revenues of approximately $500 million and tremendous growth potential. Meredith has an established and profitable digital business and is well-positioned to maximize opportunities inherent in Media General’s current digital activities.
- Meredith Media General will build on Meredith’s success in generating revenues not dependent on advertising via its high-margin brand licensing and its nationally recognized and profitable marketing services businesses.