RBR-TVBR analysis
Citadel Broadcasting will be folded into Cumulus Media before the stock market opens Friday (9/16). The price of the deal was announced as $37 per share back in February, but the exact value was based on the stock price of Cumulus Media at closing.
Cumulus’ stock closed Thursday (9/15) at $2.45. That was well below the $4.34 price used in the February calculation. Under terms of the deal, Citadel shareholders were able to choose more cash and less stock if the price was below that $4.34 tipping point, so that is obviously what they did.
Based on the maximum cash formula of $30 in cash and 1.613 Cumulus shares for each Citadel share/warrant, we calculate a final value of $33.95 for each Citadel share or warrant being cashed in.
Both classes of Citadel’s shares and its warrants all closed Thursday at the same price: $33.50.
So, what’s the total value of the Citadel acquisition, described at various times over the months as either $2.4 billion or $2.5 billion? Multiply the $33.95 consideration by the 47 million Citadel shares outstanding and the equity part is $1.6 billion. Add in $700 million in debt being assumed and refinanced by Cumulus and the total being paid for Citadel is $2.3 billion.
The final figure is actually a bit less than that, since Citadel has been piling up free cash flow, which goes into the Cumulus coffers as the merger closes.
