Nexstar, Meredith Offer New Terms in Fight for Media General

  • Meredith, Media General couldn't reach termination agreement
  • Both Meredith, Nexstar shares fall after public offers

Nexstar Broadcasting Group Inc. and Meredith Corp. have both proposed new terms in their battle to combine with TV station owner Media General Inc.

Nexstar would pay $17.66 a share for Media General in cash and stock, it said in a statement Thursday. Minutes later, Meredith released a statement, offering to amend the terms of its current agreement with Media General to pay about $18.84 a share.

Media General, in its own statement, said it has made several proposals to Meredith to end their deal so that it can proceed with Nexstar. Meredith has been unwilling to accept a termination, Media General said. Meredith is still willing to negotiate terms on its new agreement, Chief Executive Stephen Lacy said in a statement.

“Given the compelling and superior value inherent in this proposal, we ask that the Media General board of directors re-enter serious negotiations around the merger of equals structure and its merits,” Lacy said.

Media General rejected an offer from Nexstar last month of $16.31 a share. Media General agreed to acquire Meredith Corp. for $2.4 billion in September.

Station Sales

Before announcing the proposed amended terms for a combination with Media General, Meredith made an offer to break off the deal under certain conditions. Those included buying three Media General television stations for a discounted price, an additional $20 million in breakup fee, and two of Media General’s digital businesses, according to people familiar with the matter.

Media General, after conferring with Nexstar, countered by offering to sell Meredith two of the three stations it wanted and two other stations, no additional money, and one of the digital businesses, one of the people said. Media General wouldn’t sell the stations Meredith wanted at a discount, the people said.

Media General did offer to pay Meredith its $60 million break fee now, rather than after a failed shareholder vote and a completed deal between Nexstar and Media General, the people said. Negotiations between Meredith and Media General broke down after Meredith rejected Media General’s counter-proposal, they said.

Spokespeople at Meredith, Media General and Nexstar declined to comment.

Committed Financing

Nexstar’s offer breaks down to $10.55 in cash and 0.1249 share of Nexstar Class A common stock, based on its closing price Wednesday, it said. The company said it has committed financing for the transaction for approximately $4.7 billion, and intends to sell some TV stations to get regulatory approval for a combination.

The proposal also includes a contingent value right, which gives Media General shareholders a part of net cash proceeds from the sale of Media General’s spectrum in a U.S. government auction this year.

Merger of Equals

Meredith’s amended proposal of about $18.84 a share, which it called a merger of equals, includes $3.90 a share in cash and one share of the new company valued at $14.94 each. The equity price is based on an implied, pro forma value of the combined company at a multiple of nine times earnings before interest, taxes, depreciation and amortization, the statement shows.

Meredith’s offer also includes a contingent value right, representing after-tax proceeds from the sale of Media General’s spectrum in the upcoming auction, that could be valued at as much as $4.29 a share.

If Meredith holds out and refuses to terminate the September deal, it could force a shareholder vote at Media General, meaning Nexstar may have to wait until the second half of 2016 or longer to complete a deal. If Nexstar and Media General enter a merger agreement during a Federal Communications Commission quiet period related to the spectrum auction, the FCC won’t process and approve it until after the auction concludes. The quiet period begins Jan. 12.

Shares of Nexstar dropped 7.1 percent to $52.84 at the close in New York. Media General rose 2.2 percent to $16.12, while Meredith declined 6.2 percent to $38.90.

Bank of America Corp.’s Merrill Lynch is acting as financial adviser to Nexstar, with Kirkland & Ellis providing legal advice. RBC Capital Markets and Goldman Sachs Group Inc. are advising Media General, alongside lawyers at Fried Frank Harris Shriver & Jacobson and Weil Gotshal & Manges.

(In a previous version of this story, the per share value of Meredith’s amended proposal was corrected.)

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