Meredith Accepts Gray’s Revised Offer For TV Stations

Meredith Corp said today it has accepted a revised proposal from Gray Television to buy Meredith’s television stations for about $2.83 billion, up from the original deal's $2.7 billion.

Gray Television today confirmed that Meredith Corp. recently informed Gray that, after announcing the definitive merger agreement with Gray, it had received an unsolicited proposal to acquire its Local Media Group division, including all of Meredith’s broadcast television stations, from another party.

Gray subsequently offered to amend the parties’ merger agreement to increase the total consideration payable by Gray from approximately $14.50 per share in cash, or $2.7 billion in total enterprise value (after the spinoff of Meredith’s National Media Group to the current Meredith shareholders), to $16.99 per share in cash, or $2.825 billion in total enterprise value; to increase certain fees due to the other party under certain termination events under the Merger Agreement; and to make certain other revisions. On June 2 Gray and Meredith entered into an amendment to reflect the revised terms.

Meredith has informed Gray that its board of directors unanimously approved the revised Gray proposal, citing superior certainty of value, regulatory considerations, path to close and expected timing.

The Gray announcement adds:

“Gray remains committed to moving forward with its pending acquisition of Meredith’s local television stations. Gray continues to believe that the proposed Gray/Meredith transaction is in the best interests of the shareholders of both Gray and Meredith, as well as the companies’ respective employees, business partners, and local communities.

“Meredith’s Board continues to recommend that its shareholders approve the proposed transaction with Gray. In addition, Meredith shareholders with voting control of approximately 87% of the issued and outstanding Class B common stock of Meredith have entered into a voting and support agreement that generally requires that those shareholders vote their shares in favor of the adoption of the Merger Agreement and take certain other actions to support the transactions contemplated by the Merger Agreement (including voting against any competing proposal) as long as the Merger Agreement has not been terminated.


“Gray continues to expect that the Meredith transaction, even as amended, will be significantly accretive to free cash flow per share. To date, Gray has identified an estimated $55 million in synergies annualized for the first full calendar year following the closing. Including these anticipated $55 million of synergies, the revised purchase price for Gray’s acquisition of Meredith represents a multiple of approximately 8.3 times a blended average of the Meredith television stations’ 2019/2020 operating cash flow.

“The transaction is subject to approval by Meredith’s shareholders and customary closing conditions and regulatory approvals, including certain consents necessary to effectuate the spin-off of Meredith’s National Media Group immediately prior to the closing of Gray’s acquisition of Meredith. Expected strong free cash flow generation through the closing of all pending transactions and throughout 2021 and 2022 is anticipated to allow Gray to deleverage its capital structure following the closing. Assuming a year-end 2021 closing, Gray anticipates that its total leverage ratio, net of all cash, would approximate 5.4 times on a trailing eight-quarter operating cash flow, including estimated annualized synergies from all announced transactions.”

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