Traders seem to like both Citadel and Cumulus


Since Cumulus Media put Citadel Broadcasting into play with an unsolicited and unwelcomed buyout bid, Wall Street traders have been fond of both stocks. Both gained when the word got out and have pretty well held onto those gains.

Citadel didn’t identify its unwanted suitor when it announced December 6th that a takeover bid had been rejected. Even so, everyone guessed immediately that it was Cumulus Media, which turned out to be correct.

Cumulus Media’s stock had closed Friday, December 3 (the last trading day before this public battle began) at $3.50. It has been above $4 since December 17 and hit a recent closing high of $4.56 on December 27th.

Citadel has three publicly trades securities with each having the same theoretical value as the others. (That was a result of the attribution needs of various former creditors who became shareholders when the company exited Chapter 11 in June 2010.)

Citadel’s Class A voting stock closed December 3 at $25.00. It has lately been above $30.00.

The company’s Class B non-voting stock last traded at $27.75 before the initial news. Recent trading has been above $30.00.

Citadel’s publicly traded warrants are exchangeable for Class A shares at an exercise price of zero, so they have the same value as the stock. Trading at $27.49 on December 3rd, the warrants have also been lately staying above $30.00.

The proposed acquisition – which has been rebuffed by Citadel’s board of directors – would have Cumulus acquire a much larger company. Exclusive analysis by RBR-TVBR spelled out what the financials would look like. Click here to read it.

RBR-TVBR observation: Effective with our daily stock report for Monday, January 3, 2011 RBR-TVBR will be including all three Citadel securities in our daily listings. Be forewarned that not all three will trade every day, but as a group they should provide some indication of how Wall Street values the company.