The company said that while Nexstar’s offer to buy the company that followed Media General’s announcement to merge with Meredith Corp. is undervalued, it will enter into talks with Nexstar. Nexstar says it's eager to negotiate, but is sticking with its original offer of cash and stock that now amounts to $15.70 per share.
Media General To Negotiate With Nexstar
Media General today announced that it would negotiate with Nexstar Broadcasting Group regarding its unsolicited takeover proposal in September.
Nexstar made the bid after Media General announced a merger agreement with Meredith Corp.
Media General also said it told Nexstar that its board has rejected the September offer, believing it “significantly undervalues Media General and its prospects.”
Among other things, Media General said, the offer “substantially discounts Media General’s standalone growth prospects, ignores the significant asset value embedded in Media General’s excess spectrum that can be monetized via the upcoming broadcast auctions, and does not reflect an equitable share of the synergies outlined in the proposal made by Nextstar.”
In response, Nexstar CEO Perry Sook said the station group was eager to negotiate, but was “surprised” that Media General considers its September bid inadequate. “We believe our proposal will deliver superior, immediate and long-term value to Media General shareholders compared with any alternatives available to the company.”
On Sept. 28, Nexstar offered $10.50 and .0898 shares of Nexstar stock for each share of Media General. That amounted to $14.50 per share.
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Because Nexstar stock price has gone up since then, its bid, based on Friday’s stock closing, now amounts $15.70 per share, it said.
Shares of Media General fell 18 cents to $15.28, Meredith’s stock shed 5 cents to $45.02. Shares of Nexstar Broadcasting Group Inc. added 33 cents to $58.24 in midday trading.
Media General has little choice but to negotiate with Nexstar. Its major investors have roundly criticized its merger with Meredith, as well as its decision to rebuff an earlier takeover offer from Nexstar.
“It is evident since our initial announcement that Media General and Nexstar shareholders recognize the compelling strategic and financial value that a Media General-Nexstar combination presents for both companies and our respective shareholders,” said Sook.
In response to the news, Meredith issued a statement: “Meredith understands Media General board’s fiduciary responsibility to respond to the Nexstar proposal consistent with our binding merger agreement announced on Sept. 8, 2015. However, Meredith still remains confident that the combination of Meredith and Media General will generate superior shareholder value — over both the near- and long-term — as compared to a potential Nexstar transaction.
“It is important to remember that our binding agreement to merge with Media General remains in place with fully-committed financing of $2.8 billion; we are making significant progress on achieving key regulatory approvals needed to complete the transaction; our joint integration work has already identified additional synergies; and the Meredith and Media General Boards of Directors continue to recommend the Meredith-Media General transaction.
“Under the terms of our binding merger agreement, Meredith will have the opportunity to review — and propose an alternative superior proposal — to a potential agreement Media General might reach with a third-party.”
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