Nexstar Offers to Buy Media General for $1.85 Billion

28 Sep 2015 | Author: | No comments yet »

Media General Confirms Receipt of Unsolicited Proposal from Nexstar.

IRVING, Texas — Nexstar Broadcasting is trying to wedge between Media General and Meredith Corp. with a nearly $1.9 billion offer to buy Media General. RICHMOND, Va., Sep 28, 2015 (BUSINESS WIRE) — Media General, Inc. (NYSE: MEG; www.mediageneral.com) (“Media General” or the “Company”) todayconfirmed that it has received an unsolicited proposal from Nexstar Broadcasting Group, Inc.Nexstar Broadcasting has made a bid for TV-station owner Media General, in a surprise maneuver aimed at breaking up Media General’s effort to acquire Meredith Corp. NXST, -2.56% to acquire all of the outstanding common stock of Media General for $14.50 per share in cash and stock, including $10.50 per share in cash and a fixed ratio of 0.0898 Nexstar shares per Media General share.

The proposal comes less than three weeks after Media General offered to pay $2.4 billion for its rival Meredith, the publisher of Better Homes and Gardens magazine and owner of a variety of local television stations. Consistent with its fiduciary duties, the Media General Board of Directors, in consultation with its legal and financial advisors, will carefully review and consider the proposal to determine the course of action that it believes is in the best interests of the Company and its shareholders. Media General said at the time that the Meredith deal would create one of the largest owners of broadcast network affiliates in the United States, with annual revenue of about $3 billion. Perry Sook, Chairman, President and CEO of Nexstar, said, “The transaction we are proposing would be a transformational event for both Nexstar and Media General shareholders and would deliver superior, immediate and long-term value to Media General’s shareholders compared with Media General’s proposed acquisition of Meredith. “Our proposal provides a significant premium to Media General’s shareholders, including a cash component nearly equal to Media General’s current share price. This communication is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.

Nexstar is already growing rapidly as a result of our organic and M&A initiatives, but a combined Nexstar/Media General would be even better positioned for long-term success in a dynamic and consolidating market and certainly better positioned to deliver shareholder value than a combined Media General/Meredith.” No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Media General, based in Richmond, Va., owns or operates 71 television stations in 48 markets and owns a digital media business, whose portfolio includes Federated Media and BiteSizeTV. We look forward to engaging in dialog with the financial community regarding the superior merits of our proposed transaction.” BofA Merrill Lynch is acting as financial advisor and Kirkland & Ellis LLP is acting as legal counsel to Nexstar in connection with the proposed transaction. Pro-forma for synergies, the combination would generate in excess of $450 million of annual free cash flow (averaged over two year cycles), which would be allocated for continued investment in the business and for deleveraging and other initiatives that enhance long-term shareholder returns.

Information about Media General’s directors and executive officers is available in Media General’s definitive proxy statement, dated March 13, 2015, for its 2015 annual meeting of shareholders. The company expects to own and operate 114 television stations after completing other recently announced transactions, including an agreement announced this month to buy four North Dakota television stations for $44 million. Other information regarding the participants and description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Form S-4 and the joint proxy statement/prospectus regarding the Merger that Meredith Media General will file with the SEC when it becomes available. You can generally identify forward-looking statements by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “explore,” “evaluate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” or “will,” or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond Media General, Meredith and Meredith Media General’s control.

It also represents an enterprise value multiple of approximately 9.1x Media General’s projected blended 2015/2016 EBITDA based upon analysts’ consensus estimates, which compares favorably with both precedent transactions and trading multiples in the broadcast sector. At the same time, your shareholders would own approximately 26% of the combined company, thereby providing substantial ongoing participation in a well-positioned pure-play broadcasting company led by a management team with a strong long-term record of shareholder value-creation. Based on the stated rationale and benefits associated with the Meredith merger, you clearly believe in the logic of broadcast consolidation and that the value of Media General’s assets can be better realized under different management. With unmatched local-to-national reach and integrated marketing solutions, Media General is a one-stop-shop for agencies and brands that want to effectively and efficiently reach their target audiences across all screens.

We would be an enhanced retransmission partner, have available potential additional spectrum for upcoming auctions and deliver greater opportunities for disciplined expansion in digital media and other complementary operating areas. Overlapping markets in the Meredith transaction include top-ranked DMAs including Portland, OR (#23), Nashville, TN (#29) and Hartford-New Haven, CT (#30), which are expected to be divested as a regulatory condition to complete that combination. We believe a Media General/Nexstar combination is far more complementary; while it would require a similar number of divested stations, they would be in significantly smaller markets and result in substantially less revenue and EBITDA leakage. It provides your shareholders with a substantial premium, certain and immediate cash value, and continued participation in the ongoing strategic and financial benefits of a combination with Nexstar, including anticipated year one synergies of $75 million. Nexstar’s management team has achieved excellent results on behalf of our shareholders in the 12 years since Nexstar’s IPO and clearly highlight our management’s unwavering commitment to the creation of shareholder value.

Accordingly, a definitive agreement between us would not contain any financing condition, and we are prepared to provide you with full financing commitment papers. We believe the regulatory requirements presented by a combination of our companies would be straightforward, and we would intend to address them through commitments consistent with those in your existing merger agreement. This letter is a non-binding, preliminary proposal, which is subject to the execution and delivery of mutually acceptable definitive agreements, termination of your transaction with Meredith and the satisfaction of customary closing conditions.

Nexstar’s record of effectively integrating and extracting synergies from acquired stations and assets has consistently met or exceeded our goals and expectations. We believe that our long-term acquisition strategies and operating discipline, combined with the prudent management of our capital structure, is a proven formula for sustained long-term growth and shareholder value appreciation. Accordingly, we are highly confident that a Nexstar-Media General combination would deliver significant value to our respective shareholders and provide a clear and transparent path toward creating a stronger company, well-positioned to achieve sustainable, long-term growth. Nexstar owns, operates, programs or provides sales and other services to 107 television stations and related digital multicast signals reaching 58 markets or approximately 18.0% of all U.S. television households.

Nexstar’s portfolio includes affiliates of NBC, CBS, ABC, FOX, MyNetworkTV, The CW, Telemundo, Bounce TV, Me-TV, LATV, RTV, Estrella, This TV, Weather Nation Utah, Movies! and News/Weather. Nexstar’s community portal websites offer additional hyper-local content and verticals for consumers and advertisers, allowing audiences to choose where, when and how they access content while creating new revenue opportunities. In furtherance of this proposal and subject to future developments, Nexstar (and, if a negotiated transaction is agreed, Media General) may file one or more registration statements, prospectuses, proxy statements or other documents with the U.S. Forward-looking statements include information preceded by, followed by, or that includes the words “guidance,” “believes,” “expects,” “anticipates,” “could,” or similar expressions.

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