Nexstar Media Group, Inc. and Tribune Media Company announced December 3 that they have entered into a definitive merger agreement whereby Nexstar will acquire all outstanding shares of Tribune Media for $46.50 per share in a cash transaction that is valued at $6.4 billion, including the assumption of Tribune Media’s outstanding debt.
The proposed transaction will combine two leading local media companies with complementary national coverage and will reach approximately 39% of U.S. television households pro-forma for anticipated divestitures and reflecting the FCC’s UHF discount.
In Michigan, Nexstar presently owns WOOD-TV/WOTV-TV/WXSP-CD (Grand Rapids), WLNS-TV (Lansing) and WJMN-TV (Marquette). In addition, it has a joint sales and shared services agreement with WLAJ-TV (Lansing). Tribune operates one station in Grand Rapids, WXMI-TV.
Following the completion of the transaction, Nexstar natiowide will benefit from increased operational and geographic diversity and scale as a result of Tribune Media’s diverse portfolio of media assets including 42 owned or operated broadcast television stations in major U.S. markets; compelling local news and entertainment content creation; significant broadcast distribution; a reinvigorated general entertainment cable network, WGN America; a 31% ownership stake in TV Food Network, which is a top tier cable asset; and equity investments in several digital media businesses.
Perry Sook, Chairman, President and CEO of Nexstar, commented, “Nexstar has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies. We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today’s rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate. As with our past transactions, we have developed a comprehensive regulatory compliance plan and believe we have a clear path to closing. With committed financing and a plan for significant synergy realization that will result in only a minimal increase in Nexstar’s pro-forma leverage, the combined entity will be poised for growth, leverage reduction and increased capital returns for shareholders.
Peter Kern, CEO of Tribune Media, said, “We are delighted to have reached this agreement with Nexstar as it provides Tribune shareholders with substantial value and a well-defined path to closing. Together with Nexstar we can better compete by delivering a nationally integrated, comprehensive and competitive offering across all our markets. We believe this combination will produce an even stronger broadcast and digital platform that builds on the accomplishments of both companies and benefits our viewers and advertisers. The premium value our shareholders are receiving reflects the hard work of our dedicated Tribune employees in maximizing the value of our portfolio. I look forward to working closely with the Nexstar team to deliver on the value of this compelling combination and to ensure a smooth transition and integration of our companies.”
Thomas Carter, Chief Financial Officer of Nexstar, added, “This accretive transaction marks further progress toward our goal of improving our competitive position by strategically expanding our operating base to realize the benefits of scale, increasing our strategic and financial flexibility, and driving shareholder value. Our long-term experience in integrating acquired assets and our success over the last seven quarters in outperforming our synergy targets and driving other operating efficiencies related to our acquisition of the Media General operations will serve us well as we add the Tribune Media assets to our operating base. With our experienced management team, operating discipline and focused approach to managing our capital structure and cost of capital, we believe the acquisition of Tribune Media presents another meaningful opportunity for Nexstar, the markets we serve and our shareholders. ”
Completion of the transaction is subject to approval by Tribune’s shareholders, as well as customary closing conditions, including approval by the FCC, and satisfaction of antitrust conditions. Nexstar intends to divest certain television stations necessary to comply with regulatory ownership limits and may also divest other assets which it deems to be non-core. All after-tax proceeds from such asset sales are expected to be applied to leverage reduction.