The morning after Citadel Broadcasting announced a tentative deal to sell itself to Cumulus Media for $37 per share, Cumulus issued its own confirmation. It is pitching Wall Street on the financial plusses of the proposed acquisition.
Investors apparently don’t need much convincing, since Cumulus Media’s stock was up 10.9% on Thursday as rumors swirled of the deal being cut.
Here’s the pitch to Wall Street from the acquirer:
“Cumulus anticipates that the transaction, after giving effect to anticipated synergies, will be accretive relative to Cumulus’ current Adjusted EBITDA trading multiple.
After giving effect to the proposed acquisition, Cumulus would own 570 radio stations across approximately 120 US markets.
A combination of Cumulus and Citadel, together with CMP, would provide Cumulus with:
–A truly national platform with approximately 120 US markets, including 8 of the top 10 markets;
–A balance sheet with lower overall leverage and a simplified capital structure;
–A significantly enhanced equity market capitalization for Cumulus, which would provide greater trading liquidity and strategic flexibility;
–The scale necessary to effectively compete and invest in the local digital media marketplace; and
–A network for the syndication of content and technology assets.
Execution of a definitive merger agreement with Citadel is subject, among other things, to completion of due diligence and financing arrangements. There can be no assurance the parties will reach a definitive agreement or, if an agreement is reached, that a transaction will be completed or on what terms. Any transaction would be subject to the approval of each company’s board of directors, as well as obtaining regulatory and shareholder approvals, and other customary conditions.”
The Cumulus announcement repeated the basic terms of the $37 per share offer – with Citadel shareholders getting to pick from a range of cash/stock options – and with Centerview Partners and Macquarie Capital investing up to $500 million in new equity.
UBS Investment Bank and Macquarie Capital are acting as financial advisors, and Jones Day is acting as legal counsel, to Cumulus in the transaction. JPMorgan Securities LLC and Lazard are acting as financial advisors, and Weil Gotshal & Manges LLP is acting as legal advisor, to Citadel.
RBR-TVBR exclusive background reading: