The Media General station group has formally rejected Nexstar Broadcasting’s $4.1 billion acquisition offer but is set to begin negotiations with its unsolicited suitor, adding heat to the takeover bid that Nexstar initiated in September.
Richmond, Va.-based Media General said in a statement that its board of directors has authorized executives to engage in negotiations with Nexstar on a possible acquisition. Media General in September announced a merger plan with station group and magazine publisher Meredith Corp., which spurred Nexstar’s rival offer.
Media General said its board of directors was still endorsing the Meredith merger as the better course of action for the company that owns 71 stations serving 48 markets. The Meredith deal is valued at $3.1 billion.
Media General said it believes Nexstar’s offer undervalues the potential for Media General stations to profit in next year’s spectrum auctions, in which broadcasters have the ability to sell parts of their spectrum allocation in various markets back to the government for big bucks.
“Among other matters, the proposal substantially discounts Media General’s standalone growth prospects, ignores the significant asset value embedded in Media General’s excess spectrum that can be monetized via the upcoming Broadcast Auctions, and does not reflect an equitable share of the synergies outlined in the proposal made by Nextstar,” Media General said in a statement.
Nexstar, based in Irving, Texas, owns 107 TV stations reaching 58 markets, most of them below the top 50 markets. The company has been active in buying up stations at a time of general consolidation in the broadcasting arena.
Nexstar said it was “surprised” at Media General’s decision on its offer but would “engage” with them in discussions.
“We are eager to move forward with discussions with Media General regarding our proposal, while at the same time maintaining our financial discipline. It is evident since our initial announcement that Media General and Nexstar shareholders recognize the compelling strategic and financial value that a Media General-Nexstar combination presents for both companies and our respective shareholders,” said Nexstar CEO Perry Sook. “We are surprised that Media General’s Board considers the value of our proposal to be inadequate today, however, we are willing to engage with them to hear their perspectives. We believe our proposal will deliver superior, immediate and long-term value to Media General shareholders compared with any alternatives available to the company.”