Activist Starboard Urges Media General to Pursue Nexstar Offer

  • Starboard owns 4.5 percent of Media General, threatens proxy
  • Hedge fund urges Media General to abandon deal with Meredith

Activist fund Starboard Value is urging Media General Inc. to abandon its announced takeover of Meredith Corp. and to negotiate with Nexstar Broadcasting Group Inc., which made an unsolicited bid for the broadcast television group Monday.

Starboard, the hedge fund led by Jeff Smith, said in a public letter Tuesday it would vote its 4.5 percent of Media General’s shares against the “value-destructive” Meredith deal, and criticized the company’s unwillingness to engage in sale talks with with Nexstar.

“We believe a combination of Nexstar and Media General is highly strategic,” Starboard wrote in the letter, threatening a proxy fight to replace the company’s board if ignored, and seeking “constructive engagement.”

Nexstar offered to buy Media General for about $1.85 billion, trying to break the broadcaster’s agreement to acquire Meredith, the magazine publisher and owner of TV stations, according to a statement Monday.

In a letter to Media General, Nexstar Chief Executive Officer Perry A. Sook said his company has been trying to enter into “substantive” negotiations with Media General for months about a merger. Instead, Media General agreed to buy Meredith in a $2.4 billion transaction earlier this month, adding network affiliates and magazines such as Better Homes and Gardens and Shape.

Media General’s board “will carefully review and consider the proposal,” the company said Monday, adding that it won’t comment until the directors complete the review.

Starboard typically targets small- and mid-cap public companies it considers undervalued, pushing executives and directors for changes such as unit spinoffs and asset sales.

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