The melodrama continues: Meredith-Media General? or will it be Nexstar-Media General?
The Meredith-Media General merger may still be on. Last week both Media General and Nexstar, the broadcaster that looked to be coming in to mess things up for Meredith, admitted in press releases that they were at an impasse. I held off reporting that only because I assumed that both sides were playing a negotiating game, but at this point that doesn’t look to be the case (and I did not reach out to either party for comment knowing that because this involves negotiations neither would likely contribute a comment).
Background: On September 8, Meredith and Media General announced that they had reached a merger deal where Media General would acquire all of the outstanding common stock of Meredith – a deal valued at $2.4 billion. Once completed, J. Stewart Bryan III, currently Media General Chairman, would become Chairman of the new company, Meredith Media General. Stephen M. Lacy, Meredith’s CEO, would lead Meredith Media General as CEO and President.
A couple of weeks later Nexstar Broadcasting Group entered the picture, submitting a bid for Media General. Nexstar said that not only was their bid better, but that the new company that would be created by a Nexstar-Media General merger would be superior because it only involved local tv broadcasting (and not print magazines, a slap at Meredith’s major business line).
That was on September 28. The next day, Media General shareholder Starboard came out against the Meredith-Media General deal, sending a letter to the Media General board of directors.
“Effectively, Media General agreed to pay a significant premium to acquire a larger company with a less desirable business mix and then hand over management control to the target’s management team,” the letter argued.
Then came more drama as media leaks seemed to indicate that Media General was leaning towards the Nexstar deal, something the company denied (I even got a call saying so). But it turns out that this is what happened when the board of Media General met on November 16 and announced that it would begin negotiations with Nexstar. Meredith did not object, likely because of the $60 million break-up fee it would get if their deal fell through.
On November 17 Meredith issued a press release basically saying “hey, our deal is still better” – then sat back and waited as Nexstar and Media General negotiated what most thought would be a final deal.
On December 9, Nexstar broke the news that Media General’s board had rejected Nexstar’s revised proposal that it said was valued at $16.31 per Media General share.
“Despite strong support from Media General shareholders for our past proposals, we have reached an impasse in our negotiations to acquire Media General as their Board has again rejected our very compelling offer and responded with an unrealistic counter proposal,” Perry Sook, Chairman, President and CEO of Nexstar said on the 9th of this month. “The response from Media General is disappointing as our revised offer reflects our recent confirmation of our projections for first year synergies and our continued focus on structuring a transaction that would enable the combined company to generate prodigious free cash flow that would be allocated for leverage reduction, additional strategic investments and the return of capital to shareholders.”
That same day, and in response to Nexstar’s press release, Media General said that, in fact, the revise proposal submitted by Nexstar was inferior to their original proposal, and because of this it was rejected.
“Rather than improving its initial August 10, 2015 proposal of $17.00 per share based on our joint synergy work and to reflect the improved valuations in the media and TV broadcasting sectors since August 2015, Nexstar continues to reiterate its current proposal that reflects a discount to its August 10, 2015 proposal which was unanimously rejected by the Media General Board of Directors at the time,” Media General said in its press release.
Media General then says that it is unsure if this last proposal was the last and best that would be offered by Nexstar, but then added at the end of their release a reiteration that the board was still supporting the Meredith deal:
“As previously announced on September 8, 2015, Media General entered into a definitive merger agreement with Meredith Corporation 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.”
That is where things stood at the end of last week. Left unanswered was whether Nexstar would submit another proposal or revise its current one, or whether the board was firmly of the opinion that the Meredith deal would go through.
Starboard, which had objected to the Meredith deal early on, and clearly preferred a deal with Nexstar, one day after the impasse was made public, ratcheted up things by saying that they were prepared to launch a fight for the Nexstar deal.
“Nexstar is eyeing Media General’s board nominations that start on Dec. 28, as a prelude to mounting a challenger slate in a proxy battle,” the NY Post reported on the 10th.
The Post report also said that Nexstar was not willing to just walk away. “By no means is Nexstar walking away. However, they are frustrated,” the Post quoted an anonymous source.
Since then, that is, since this weekend, everyone has been radio silent.