Media General To Buy Meredith In $3.1 Bln Deal

(RTTNews) - Television stations owner Media General, Inc. (MEG) agreed Tuesday to acquire all of the outstanding common stock of diversified media company Meredith Corp. (MDP) in a cash and stock deal valued at about $2.4 billion or about $3.1 billion, including Meredith's net debt balance of $772 million.

The deal will create a new multiplatform and diversified media company to be known as Meredith Media General. It will create the third-largest owner of major network affiliates, initially with 88 stations in 54 markets reaching 30 percent or about 34 million U.S. TV households, and possessing significant digital spectrum.

The deal will see Meredith shareholders receiving cash and stock valued at $51.53 per share, which represents a 12.2 percent premium over Meredith's closing stock price of $45.94 on Friday.

Both classes of Meredith stock, Common Stock and Class B Common Stock, will receive the same consideration per share.

Media General has formed a new holding company, which after closing will be named Meredith Media General. Media General shareholders will receive one share of the new holding company for each share of Media General they own upon closing.

Meanwhile, Meredith shareholders will receive $34.57 in cash and 1.5214 shares of the new holding company for each share of Meredith they own upon closing.

The deal is expected to generate more than $80 million of total synergies within the first two years with $60 million of run-rate synergies expected in the first 12 months post-closing. The deal will also add to Media General's free cash flow per share in the first full calendar year post closing.

Following the closure of the deal, Media General shareholders will own about 65 percent and Meredith shareholders will own about 35 percent of the fully-diluted shares of the new holding company, Meredith Media General.

The Board of Directors of Meredith Media General will consist of 12 directors, eight appointed by Media General and four appointed by Meredith.

Media General Chairman Stewart Bryan III will be Chairman of Meredith Media General, while Meredith Chairman and CEO Stephen Lacy will lead the company as its president and CEO. Meanwhile, Meredith CFO Joseph Ceryanec will be in the same position in the new company.

The balance of Meredith Media General's senior management team will comprise a combination of the two existing executive teams. The company will maintain corporate and executive offices in Des Moines and Richmond. Meredith Media General will be incorporated in Virginia.

The deal, approved by the Boards of Directors of Media General and Meredith, is expected to close by June 30, 2016. The closure of the deal is primarily subject to approval of Media General and Meredith shareholders as well as regulatory approvals, including approval by the Federal Communications Commission.

Mell Meredith Frazier, a director of Meredith, and her brother E.T. (Tom) Meredith IV, who together beneficially own 63 percent of the Meredith Class B shares, have agreed to vote in favor of the deal. Further, affiliates of Standard General L.P., which hold about 14.5 percent of Media General's shares, have also agreed to vote in favor of the deal.

Media General will fund the deal with committed $2.8 billion in financing from RBC Capital Markets and JPMorgan Chase Bank, N.A.

In Tuesday's regular trading session, MEG is currently trading at $12.01, up $0.86 or 7.71% on a volume of 0.42 million shares, and MDP is currently trading at $50.54, up $4.60 or 10.01% on a volume of 0.35 million shares.