Nexstar Broadcasting and Media General have signed a merger agreement now that the Media General and Meredith deal is off (see our story below.) The new name of the combined entity will be Nexstar Media Group.
Nexstar will acquire MG for $4.6B in an accretive cash and stock transaction. Nexstar will acquire outstanding MG shares for $10.55 per share in cash and 0.1249 of a share of Nexstar Class A common stock for each MG share.
The agreement includes potential additional consideration in the form of a contingent value right entitling Media General shareholders to net cash proceeds as received from the sale of Media General’s spectrum in the FCC’s upcoming incentive auction.
Nexstar received financing for the deal totaling $4.7 billion from BofA Merrill Lynch, Credit Suisse and Deutsche Bank.
The transaction values Media General at $17.14 per share, an approximate 54% premium over the closing share price of Media General on September 25, 2015, the last trading day prior to Nexstar’s initial public announcement regarding its interest in acquiring Media General.
Once the deal closes, Nexstar will own 171 full-power television stations, about a two-thirds increase and gets the owners into 15 new top-50 DMAs. Nexstar Chair/President/CEO Perry Sook says the acquisition represents “a transformational growth opportunity for Nexstar and is strategically and financially compelling.”
Financially, Nexstar expects the deal to more than double the company’s revenue and adjusted EBITDA and result in over $500 million of annual free cash flow.
Media General President/CEO Vincent Sadusky said the deal provided MG shareholders with “substantial and immediate value, as well as the opportunity to participate in the significant upside potential of the combined company. Together with Nexstar, we can deliver a more comprehensive, integrated and competitive offering across all markets for the benefit of our advertisers and brands.”
The parties predict the deal to close late in the third quarter. Two members of Media General’s board will join the Nexstar board at closing.
Stockholders of both companies must approve the deal, as do the FCC and the DOJ. Nexstar intends to divest certain television stations necessary to obtain FCC approval.