This week, Nexstar Broadcast Group successfully enticed Media General (MG) away from merger partner Meredith Corp., as members of the MG board approved Nexstar’s offer of $4.6 billion in cash, stock and debt for their company. Wednesday’s announcement ends Meredith’s four-month-long quest to acquire MG through a $3.1 billion transaction that would have catapulted the merged entity (and with it, Meredith) to the rank of the nation’s third-largest owner of local television broadcast stations.
Last September, MG agreed to be acquired by Meredith after rejecting a rival offer by Nexstar. Undeterred, and after submitting several improved bids, Nexstar convinced the parties to return to the bargaining table. Capping several weeks of negotiations, MG said it would accept the Nexstar merger proposal contingent on Meredith’s commitment to withdraw its offer and refrain from further bidding. In compliance with its agreement with Meredith, MG will pay Meredith (which has agreed to walk away from the deal) a break-up fee of $60 million. Under the terms of Wednesday’s deal, Nexstar will pay shareowners of MG $10.55 in cash, plus 0.1249 shares of Nexstar Class A common stock, for every MG share held. Nexstar will assume $2.3 billion in MG debt. The agreement also includes the potential for contingent value rights that would entitle MG shareholders to net cash proceeds accrued from the sale of MG spectrum assets in the FCC’s upcoming incentive auction. Upon consummation of the transaction, and contingent upon FCC and other required regulatory approvals, the merged entity, to be known as Nexstar Media Group, would control 171 full power TV stations in 100 markets and reach 39% of U.S. television households. As Nexstar CEO Perry Sook touted the transaction as “a transformational growth opportunity,” MG CEO Vincent Sadusky expressed confidence that, “together with Nexstar, we can deliver a more comprehensive, integrated and competitive offering across all markets.”