Citadel sale price keeps dropping

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With the merger of Citadel Broadcasting into Cumulus Media due to close as soon as Thursday (9/15), the value for Citadel shareholders has been dropping with the trading price of Cumulus shares on Wall Street. Of course, lots of share prices have been falling lately.


Back when the deal was new Citadel was pitching the price as $39.45 per share/warrant. That was after the deal, announced with a value of $37.00 per share/warrant, had been pushed higher by a bump-up in Cumulus Media’s stock price following the deal announcement. The original pricing had been based on the Cumulus Media stock price of $4.34 when the preliminary deal was announced in February.

If the Cumulus Media stock price had stayed above $4.34 Citadel’s shareholders would have been expected to elect the minimum cash and maximum stock option. But Cumulus hasn’t closed at $4.34 since May 19th, so the value for Citadel shareholders has been falling below the $37 announced price. Cash/stock elections are due Thursday (9/15), which is also the day they vote on approving the merger with Cumulus.

Since the share price for Cumulus remains well below the $4.34 tipping point, it’s a virtual certainty that nearly all Citadel shareholders will elect the maximum cash payout for their shares, so they’ll receive $30 cash and 1.613 Cumulus shares for each Citadel share or warrant. At Friday’s (9/9) closing price of $2.49 that’s a total consideration of just under $34.02 per Citadel share/warrant. Monday’s (9/12) close for Cumulus was $2.42, which works out to about $33.90 per share for Citadel.

RBR-TVBR observation: The prices for Citadel’s thinly traded Class A shares, Class B shares and warrants have also fallen below $33 in recent trading to reflect the declining value of the deal, based on the price of Cumulus Media shares. It seems unlikely that the drop will spark any movement by the vulture capital funds which own most of Citadel’s shares/warrants to vote against the merger. Those guys just want to take their profits and move on.