Dealpolitik: How Media General Could Save Its Deal With Meredith

Nexstar’s offer includes $10.50 per share in cash and a fixed ratio of 0.0898 shares per Media General share.

This potentially will upend the recent bid by Media General for Meredith Corporation. It said a tie-up with Media General would reach 39 percent of U.S. TV households and create the second-largest owner of major network affiliates. “Our board strongly believes that a merger of Media General and Nexstar would be strategically and financially compelling for both of our companies and shareholders”. “Our proposal provides a significant premium to Media General’s shareholders, including a cash component nearly equal to Media General’s current share price”.

“Further exacerbating the issue is the fact that the proposed Meredith transaction seems to be a step backwards in strategy for Media General“.

Nexstar Broadcasting Group, Inc.is a television broadcasting and digital media firm focused on the acquisition, development and operation of television stations and interactive community Websites in moderate-sized markets in the United States. Meredith CEO Stephen Lacy is in line to lead the combined entity. Media General recently announced it was buying Meredith for $2.4 Billion. Des Moines, Iowa-based Meredith has a smaller number of local TV stations and publishes magazines including Shape and Midwest Living. The activist investor also said it would vote its shares against the Meredith deal, even before considering Nexstar’s offer.

TVnewscheck.com reported that in an open letter to Media General management, Starboard Value said they had “serious concern” over Media General’s apparent refusal to “negotiate a superior transaction with Nexstar prior to finalizing the questionable Meredith transaction”. “The combined company’s significantly expanded audience reach and portfolio diversification would be highly attractive to programmers and advertisers alike, and its enhanced operating and financial scale would position it for near- and long-term success in an environment of ongoing industry consolidation”.

The proposal arrives just over two weeks after the offer of Media General of $2.4 billion for Meredith the Better Homes and Garden publisher and owner of many local television stations.

Shares of Media General jumped 22 percent to close at $13.64 on Monday.