Nexstar Broadcasting Group, Inc. (Nasdaq: NXST) today disclosed that it
has reached an impasse in its negotiations to acquire Media General,
Inc. (NYSE: MEG), following the rejection by Media General’s Board of
Directors of Nexstar’s revised proposal that is currently valued at
$16.31 per Media General share, based on Nexstar’s closing share price
on December 8. Nexstar’s revised proposal consists of $11.00 per share
in cash (less the value of the break fee liability of approximately
$0.46 per share related to Media General’s Board’s agreement to acquire
Meredith Corporation, or a cash payment of $10.54 per Media General
share) and a fixed exchange ratio of 0.1024 Nexstar shares per Media
General share, up from the previous ratio of 0.0898. The current Nexstar
proposal represents a premium of 46.3% over Media General’s closing
stock price on September 25, the last trading day prior to Nexstar’s
initial offer being made public.
Media General’s Board has rejected Nexstar’s revised offer, which also
included an agreement in principle to offer a net contingent value right
(CVR) that would provide Media General shareholders with cash based on
the net proceeds received from the sale of its spectrum in the upcoming
auctions, less any benefit that Media General shareholders would
otherwise be entitled to as Nexstar shareholders from the sale of
Nexstar spectrum.
Media General responded with a counter proposal consisting of $11.00 per
share in cash, an exchange ratio of 0.135 Nexstar shares per Media
General share and the CVR. Excluding the value of the CVR, the current
value of Media General’s counter proposal is $18.61 per Media General
share, representing a premium of approximately 66.9% over Media
General’s closing share price on September 25 and an enterprise value
multiple of approximately 10.6x Media General’s projected blended
2015/2016 EBITDA.
“Despite strong support from Media General shareholders for our past
proposals, we have reached an impasse in our negotiations to acquire
Media General as their Board has again rejected our very compelling
offer and responded with an unrealistic counter proposal,” said Perry
Sook, Chairman, President and CEO of Nexstar. “The response from Media
General is disappointing as our revised offer reflects our recent
confirmation of our projections for first year synergies and our
continued focus on structuring a transaction that would enable the
combined company to generate prodigious free cash flow that would be
allocated for leverage reduction, additional strategic investments and
the return of capital to shareholders.”
Mr. Sook continued, “Our current proposal is at the limits of reasonable
multiples for Media General’s projected blended 2015/2016 EBITDA based
upon analysts’ consensus estimates as well as recent precedent
transactions in the broadcast sector. Our proposal also takes into
consideration the fact that the Media General Board, without negotiating
in August with Nexstar on its original proposal to acquire the company
for $17 per share, reached an agreement with Meredith which created a
sizeable break fee liability amounting to $0.46 per share of lost value
for Media General shareholders. The counter proposal from Media General
is unreasonable. As a disciplined acquirer, we will only consummate a
transaction that makes sense for both companies’ shareholders. Given
factors such as the current interest rate environment and the impending
commencement of high levels of political advertising, time is of the
essence and further delays in reaching reasonable terms for a
transaction could impact the value creation we outlined at the time we
announced our original proposal. We believe Media General shareholders
will be disappointed with their Board’s unreasonable negotiating
position given the immediate and long-term strategic and economic
benefits a combination with Nexstar would provide, and that they will
urge Media General to engage with us to reach a transaction on
reasonable economic terms.”
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.
About Nexstar Broadcasting Group, Inc.
Nexstar
Broadcasting Group is a leading diversified media company that
leverages localism to bring new services and value to consumers and
advertisers through its traditional media, digital and mobile media
platforms. Nexstar owns, operates, programs or provides sales and other
services to 106 television stations and related digital multicast
signals reaching 57 markets or approximately 17.3% 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,
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.
Pro-forma for the completion of all announced transactions Nexstar will
own, operate, program or provide sales and other services to 115
television stations and related digital multicast signals reaching 62
markets or approximately 18.1% of all U.S. television households.
Additional Information
This communication does not constitute an offer to buy or solicitation
of an offer to sell any securities. This communication relates to a
proposal which Nexstar Broadcasting Group, Inc. (“Nexstar”) has made for
a business combination transaction with Media General, Inc. (“Media
General”). 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. Securities and
Exchange Commission (“SEC”). This communication is not a substitute for
any registration statement, prospectus, proxy statement or other
document Nexstar and/or Media General may file with the SEC in
connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS
OF NEXSTAR AND MEDIA GENERAL ARE URGED TO READ ANY REGISTRATION
STATEMENT, PROSPECTUS, PROXY STATEMENT AND OTHER DOCUMENTS FILED WITH
THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Any definitive proxy statement (if and when available) will be mailed to
stockholders of Media General. Investors and security holders will be
able to obtain free copies of these documents (if and when available)
and other documents filed with the SEC by Nexstar or Media General
through the web site maintained by the SEC at http://www.sec.gov.
Certain Information Regarding Participants
Nexstar and certain of its directors and executive officers may be
deemed to be participants in any solicitation with respect to the
proposed transaction under the rules of the SEC. Security holders may
obtain information regarding the names and interests of Nexstar’s
directors and executive officers in Nexstar’s Annual Report on Form 10-K
for the year ended December 31, 2014, which was filed with the SEC on
March 2, 2015, and Nexstar’s proxy statement for the 2015 Annual Meeting
of Stockholders, which was filed with the SEC on April 24, 2015. These
documents can be obtained free of charge from the sources indicated
above. Additional information regarding the interests of participants in
any proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will also be included in
any proxy statement and other relevant materials to be filed with the
SEC if and when they become available.
Forward-Looking Statements
This communication includes forward-looking statements. We have based
these forward-looking statements on our current expectations and
projections about future events. Forward-looking statements include
information preceded by, followed by, or that includes the words
"guidance," "believes," "expects," "anticipates," "could," or similar
expressions. For these statements, Nexstar claims the protection of the
safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. The forward-looking statements
contained in this communication, concerning, among other things, the
ultimate outcome and benefits of any possible transaction between
Nexstar and Media General and timing thereof, and future financial
performance, including changes in net revenue, cash flow and operating
expenses, involve risks and uncertainties, and are subject to change
based on various important factors, including the possibilities that
Nexstar will not pursue a transaction with Media General and that Media
General will reject a transaction with Nexstar (or otherwise that no
transaction will be consummated), the impact of changes in national and
regional economies, our ability to service and refinance our outstanding
debt, successful integration of Media General (including achievement of
synergies and cost reductions), pricing fluctuations in local and
national advertising, future regulatory actions and conditions in the
television stations' operating areas, competition from others in the
broadcast television markets served by Nexstar, volatility in
programming costs, the effects of governmental regulation of
broadcasting, industry consolidation, technological developments and
major world news events. Unless required by law, we undertake no
obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. In light of
these risks, uncertainties and assumptions, the forward-looking events
discussed in this communication might not occur. You should not place
undue reliance on these forward-looking statements, which speak only as
of the date of this release. For more details on factors that could
affect these expectations, please see our filings with the Securities
and Exchange Commission.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151209005354/en/
Copyright Business Wire 2015