Nexstar Broadcasting Group, Inc. (NXST) and Media General, Inc. (MEG) Wednesday said they have entered into a definitive merger agreement whereby Nexstar will acquire all outstanding shares of Media General for $10.55 per share in cash and 0.1249 of a share of Nexstar Class A common stock for each Media General share.
The combined company, will be named Nexstar Media Group, with a focus on diversified local marketing and content platform. Media General and Nexstar shareholders will hold approximately 34 percent and 66 percent, respectively, of the combined company's outstanding shares.
The transaction values Media General at $17.14 per share, based on Nexstar's 30-day volume weighted average price per share as of January 26, plus the value of the CVR. The transaction consideration represents an approximate 54 percent premium over the closing share price of Media General. Upon closing, the transaction is expected to be immediately accretive to Nexstar's operating results. Media General shareholders will be entitled to net cash proceeds as received from the sale of Media General's spectrum in the Federal Communication Commission's upcoming Incentive Auction.
Nexstar said it has received committed financing for the transaction totaling $4.7 billion from BofA Merrill Lynch, Credit Suisse and Deutsche Bank.
Earlier, Meredith Corp. (MDP) and Media General has terminated merger proposal and Meredith will receive the $60 million in termination fee. In addition, Meredith will receive an opportunity to negotiate for the purchase of certain broadcast and digital assets currently owned by Media General.
Perry Sook, chairman, president and CEO of Nexstar said, "The transaction increases Nexstar's broadcast portfolio by approximately two thirds with very limited overlap with our existing properties, more than doubles our audience reach, provides entrée to 15 new top-50 DMAs and offers synergies related to the increased scale of the combined digital media operations."
Nexstar expects the transaction to double its revenue and adjusted EBITDA and result in over $500 million of annual free cash flow. The deal is projected to be completed in the third quarter/early in the fourth quarter of 2016.
Two Media General directors will join the Nexstar Board of Directors at closing. Affiliates of John R. Muse, holding approximately 9 percent of Media General's outstanding shares, will have voting right for the transaction with Nexstar and against any alternative transaction unless the merger agreement is terminated.
In order to obtain FCC approval of the proposed transaction, Nexstar intends to divest certain television stations
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