Nexstar, Meredith compete for Richmond-based Media General

Published January 7, 2016 by Robert Powell, III

Richmond-based television station owner Media General Inc. and Texas-based Nexstar Broadcasting Group Inc. have agreed on terms of a deal under which Nexstar would acquire the Virginia company.

Media General, however, must terminate an earlier $2.4 billion deal to acquire Iowa-based media company Meredith Corp. for the Nexstar transaction to go through.

Meredith has not accepted Media General’s offers to terminate its acquisition. Instead, the Iowa company has made a counter offer to make the Meredith-Media General combination more appealing.

Under the terms of the proposed Nexstar deal, Media General shareholders would receive, for each of their shares: $10.55 in cash, 0.1249 of a share of Nexstar Class A common stock and a contingent value right entitling shareholders to net cash proceeds from the sale of Media General's spectrum in the FCC's upcoming spectrum auction.

Based on Wednesday’s closing prices, the Nexstar offer has  a value of $17.66 per share plus the value of the contingent value right. If the deal is completed, former Media General shareholders would hold approximately 33.4 percent of Nexstar’s outstanding shares.

Nexstar, which is based in Irving, Texas, also would agree to divest the TV stations necessary to obtain FCC regulatory approval. Two Media General directors would join the Nexstar board of directors at closing. 

But because the Meredith-Media General merger agreement has not been terminated,  “there can be no assurance that any transaction with Nexstar will result,” Media General cautioned on Thursday. In September, Media General agreed to purchase Meredith. Later that month, Nextar made an unsolicited bid to acquire Media General.

If Meredith does not agree to terminate the agreement, Media General plans to hold a shareholder meeting to vote on that deal. If shareholders don’t approve the Meredith deal, Media General would be permitted to terminate the agreement and enter the merger agreement with Nexstar. 

For its part, Des Moines, Iowa-based Meredith said on Thursday that its has proposed an amendment to the terms of its earlier agreement with Media General.

The amended agreement offers Media General shareholders more than $20 per share, a value that includes: $3.90 per share in cash,  one share of Meredith Media General for each share of Media General and a similar contingent value right to proceeds from the sale of Media General's spectrum.

In addition, the new Meredith Media General would pay an annual dividend starting at 68 cents per share.

Media General owns, operates or services 71 television stations in 48 markets. Nexstar has 87 stations in 49 markets. Meredith owns 16 stations and publishes 20 magazines, including Better Homes and Gardens.