Meredith Deal Said on Hold as Media General Assesses Nexstar Bid

  • Media General hasn't paid a breakup fee to kill Meredith deal
  • Meredith mulling options including revising Media General deal

Meredith Corp.’s agreement to be bought by Media General Inc. is on hold as Media General’s advisers assess an unsolicited bid from Nexstar Broadcasting Group Inc., people with knowledge of the matter said.

Media General is waiting for Goldman Sachs Group Inc. and Weil, Gotshal & Manges LLP to issue a recommendation on Nexstar’s $1.85 billion offer before deciding how to proceed, said the people, who asked not to be identified because the information is private.

On Monday, Media General said it hired Goldman Sachs and Weil to help the board evaluate Nexstar’s proposal. Media General, the Richmond, Virginia-based owner of broadcast TV stations and digital media, said it agreed to acquire Meredith for $2.4 billion in cash and stock on Sept 8. Nexstar announced its bid for Media General on Sept. 28, which would break up the Meredith transaction if accepted.

If Media General agrees to a deal with Nexstar, it would have to pay Meredith a breakup fee of $60 million. That hasn’t happened, said the people familiar with the situation. The New York Post reported Wednesday that the deal between Meredith and Media General is dead.

Meredith “signed a merger agreement that both boards of directors approved and continue to recommend,” Art Slusark, a spokesman, said Wednesday in an e-mailed statement. “We remain confident in the strategic rationale behind the merger and shareholder value it will create.”

A representative for Media General declined to comment.

Reverse Takeover

Meredith has several options should Media General’s advisers decide Nexstar’s proposal is superior: it can accept the breakup fee; force the agreed-upon deal to go to a shareholder vote; or revise the terms of its agreement with Media General. Meredith could also decide to challenge Nexstar with a reverse proposal to acquire Media General, the people said.

If Meredith forces a deal to go to a shareholder vote and Media General shareholders reject the transaction, Meredith would receive $15 million as a termination fee.

Media General hasn’t made contact with Nexstar to get more information on its offer and no negotiations have taken place, the people said.

While Meredith realizes its current deal with Media General is unlikely to be approved by shareholders in its current form, it will wait until the independent evaluators make a decision before proceeding, said the people.

Meanwhile, several of Media General’s shareholders, including Starboard Value, which holds 4.5 percent of the company’s outstanding shares, have urged it to abandon its Meredith deal and to negotiate with Nexstar.