The company reiterates why it thinks its deal is best. Nexstar CEO Perry Sook: "We intend to take any steps that may be necessary to allow us to consummate our agreed transaction with Media General."
Nexstar: Determined To Make Media Gen. Deal
Nexstar Broadcasting Group today reiterated its commitment to acquire Media General and to take all necessary actions to consummate a transaction that it says “is clearly in the best interests of both Media General and Nexstar shareholders.”
Perry Sook, chairman, president and CEO of Nexstar, said in a statement: “We remain fully committed to acquiring Media General and with the support of its board of directors and shareholders expect to consummate a transaction expeditiously. Despite Meredith Corp.’s attempt to recast its proposed combination with Media General as a merger of equals, it is clear that Media General favors a transaction with Nexstar and shares our commitment to seeing it to fruition. As described by Media General in its most recent S-4 filing, Meredith’s proposed no-premium merger of equals transaction is ‘not competitive with Media General’s proposed transaction construct with Nexstar.’
“While Meredith’s continuing refusal to terminate its agreement is misguided, it will not prevent Nexstar from continuing to pursue its fully negotiated transaction with Media General. In fact, based on inquiry with the Federal Communications Commission, we believe the commission will continue to process applications during the spectrum auction, with the approval in ordinary course allowing for closing of approved transactions upon the FCC’s release of the Auction Results Public Notice or shortly thereafter.
“Should the Meredith management and board persist in taking its acquisition by Media General to a vote of Media General shareholders — which is expected to occur within the next 60 days — it will certainly be voted down. The fact that Meredith sought to change its transaction terms is a clear admission that our proposal is superior. We intend to take any steps that may be necessary to allow us to consummate our agreed transaction with Media General.
“We have already reached agreement with Media General on the terms of a transaction, filed a form of merger agreement with the SEC, and have finalized terms with banks ready to provide approximately $4.7 billion in financing in support of the transaction. We expect to quickly sign a definitive agreement with Media General as soon as Media General shareholders vote down the transaction with Meredith (or earlier if a settlement is reached between Media General and Meredith to terminate their merger agreement).
“Our transaction provides a significant premium to Media General’s shareholders, including a cash component of $10.55, and allows Nexstar and Media General shareholders to participate in the near- and long-term upside of a pure-play broadcasting company with expanded audience reach, a more diversified portfolio and a significantly stronger financial profile, led by a proven broadcast and digital media management team.
“Nexstar management’s commitment to its shareholders and value creation is reflected both by our personal ownership and record of appreciation over the last five years. During this period Nexstar delivered equity returns of more than 785% compared with Meredith management’s approximate 30% return which lagged key indexes including the S&P 500 which rose 50% over this period. More recently, Nexstar delivered an 8% return over the last year compared to Meredith which lost more than 19% of its value, again underperforming its peer group and major indexes. Reflecting this data we are confident that Media General shareholders will choose Nexstar’s offer as superior to Meredith’s proposal.
“Nexstar’s acquisition of Media General will be an extraordinarily powerful combination that creates the nation’s second largest operator of television properties with a strong focus on localism. Our increased scale will allow advertisers and brands to benefit from a more comprehensive, integrated and competitive offering across all markets. Financially, this transaction will enable us to further broaden our revenue base, diversify our cash flow and generate over $500 million of annual free cash flow, equating to approximately $10.50 per share of average free cash flow per year over the 2015/2016 period, which will enhance long-term shareholder returns and would be allocated for leverage reduction, additional strategic investments and the return of capital to shareholders.
“In contrast, the Meredith proposal would again expose Media General shareholders to the challenged publishing business with approximately 54% of the acquired net EBITDA in the Meredith transaction coming from publishing. We encourage Media General shareholders to continue to voice their opposition to the transaction with Meredith in advance of the special meeting,” Sook concluded.
As previously announced, Nexstar and Media General have completed the negotiation of terms under which Nexstar would acquire Media General for $10.55 per share in cash and 0.1249 of a share of Nexstar Class A common stock for each Media General share. In addition, the terms contemplate additional consideration to Media General shareholders in the form of a contingent value right for each Media General share entitling Media General shareholders to net cash proceeds as received from the sale of Media General’s spectrum in the FCC’s upcoming spectrum auction.
The Nexstar statement also said that, as previously announced, the negotiated transaction would not be subject to any financing condition; Nexstar intends to divest the TV stations necessary to obtain FCC regulatory approval of the proposed transaction; and, two Media General directors would join the Nexstar board of directors at closing.