Nexstar Sets New Media General Merger Terms

Nexstar Broadcasting Group said today it has completed the negotiation of a new deal to 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. That’s $17.66 per share based on the yesterday’s close price of Nexstar shares.

In addition, the terms include additional consideration to Media General shareholders in the form of a contingent value right (CVR) 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.

Nexstar said it “looks forward to signing a definitive agreement with Media General” as soon as Media General’s proposed merger with Meredith Corp. has been terminated by either party or following a Media General shareholder vote in which the Media General/Meredith transaction is not approved.

The break up of the Media General-Meredith merger, announced last September, may never come, however. Shortly after Nexstar announced its agreement with Media General, Meredith countered with the announcement of a new deal that sweetens its merger with Media General for its shareholders.

Perry Sook, Nexstar chairman, president-CEO of Nexstar, said: “We are pleased to have negotiated these transaction terms with Media General as we believe the combination would be a transformational event that enables both companies’ 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.”

He Sook continued: “We are confident that a combined Nexstar-Media General would be strongly positioned for long-term success in a dynamic and consolidating broadcast market. Specifically, the combined company would be highly attractive to programmers and advertisers alike, while the anticipated year-one synergies of $76 million and generation of over $500 million of annual free cash flow will enhance long-term shareholder returns.”

Nexstar also noted that it intends to divest the TV stations necessary to obtain FCC regulatory approval of the proposed transaction. In addition, two Media General directors would join the Nexstar board of directors at closing.

The negotiated transaction would not be subject to any financing condition. Nexstar has worked with banks willing to provide commitment letters for approximately $4.7 billion in financing in support of the transaction as soon as the negotiated merger agreement is executed.

Nexstar will file a Form 8-K with the Securities and Exchange Commission, which will include the form of merger agreement negotiated between Nexstar and Media General.

BofA Merrill Lynch is acting as financial adviser and Kirkland & Ellis LLP is acting as legal counsel to Nexstar in connection with the proposed transaction.