Nexstar shares were down 5.4 percent following the announcement, while Media General shares rose 4.2 percent and Meredith shares fell 1.7 percent.
Advertisement
“Because the Meredith-Media General merger agreement has not been terminated, there can be no assurance that any transaction with Nexstar will result (or the terms or timing thereof)”, Media General’s statement says. Media General tried to terminate its agreement with Meredith, but Meredith had other ideas.
Meredith and Media General will continue along the current regulatory approval timeline, with a targeted closing date by June 30, 2016, pending successful completion of overlap station divestitures. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Nexstar will file a Form 8-K with the Securities and Exchange Commission, which will include the form of merger agreement negotiated between Nexstar and Media General.
Nexstar and Media General announced that they had come to terms on a deal.
The two proposals represent significantly different options for Media General shareholders to consider.
Under the terms of the proposed Nexstar deal, Media General shareholders would receive, for each of their shares: $10.55 in cash, 0.1249 of a share of Nexstar Class A common stock and a contingent value right entitling shareholders to net cash proceeds from the sale of Media General’s spectrum in the FCC’s upcoming spectrum auction.
Starboard has previously said it was prepared to nominate an alternative slate of directors to Media General’s board.
It quickly followed with a proposed “merger of equals” that it said valued Media General shares at $20, or $3 more than Nexstar, plus the spectrum bonus plus a dividend. Later that month, Nextar made an unsolicited bid to acquire Media General. Media General estimates that its spectrum assets could potentially be worth up to United States dollars 4.29 in after-tax value per share, before the netting mechanism associated with the CVR in the negotiated Nexstar transaction.
Meredith is also offering a CVR, $3.90 in cash, and one share in the combined company. Media General said it plans to hold a shareholder vote on the Meredith transaction as soon as possible.
Perhaps Meredith is betting that Media General will sweeten its termination package just to make it go away.
To get rid of Meredith before the vote, Nexstar could pay Meredith a bigger breakup fee than the $60 million it is promised and also sell it some broadcast assets, according to people familiar with the matter. Some investors may prefer a quick exit with Meredith – and Nexstar may be willing to give up a little more to Meredith to avoid that situation.
Advertisement
Meredith called its deal “extremely compelling”. The FCC imposes a quiet period in connection with the upcoming airwave auction that would prolong the processing of a Nexstar-Media General merger agreement, unless they opt not to participate.
