updated - February 28, 2020 Friday EST
Media General Inc. announced Tuesday that it will buy multimedia company Meredith Corp. for $2.4 billion in cash and stocks to become one of the largest local television owners in the United States.
The New York Times reported that the merged company will be named Meredith Media General, while the Wall Street Journal said the deal is expected to close next June but must first be approved by shareholders and the Federal Communications Commission. Meredith chief executive Stephen M. Lacy will lead the combined firm.
Citing a statement, the Times said the combined company will have 88 station in 54 markets in the U.S. and reach nearly a third of households or close to 34 million viewers. The Journal reported that the Meredith Media General will have $3 billion in annual revenues. It added that the company expects to save $80 million in two years from the business combination.
The Journal said Media General's will pay a 12 percent premium over Meredith's closing price last Friday of $51.53 per share. The Times said Meredith shareholders will be paid $34.57 in cash and 1.5214 shares in the combined firm. It added that Media General's shareholders will own 65 percent of the merged company, while the rest of the company will be owned by Meredith investors.
The Times reported J. Stewart Bryan III, the Media General chairman, saying that the deal will create value for shareholders due to the upside potential from the diversified and strategically well-positioned media company.
The Journal noted in its report that Media General has lost a third of its value as of Friday, with the company's $1.4 billion market capitalization lower than Meredith's $2.1 billion. It added that the company had divested a number of its newspapers to a unit of conglomerate Berkshire Hathway Inc. several years back but has been actively acquiring new media companies.
The Journal said the deal comes as media companies are splitting their print and broadcast operations and consolidation among broadcasters to increase their bargaining power from cable and satellite operators.
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