Tegna confirmed Sunday that two suitors for the station group have recently withdrawn acquisition offers, citing the upheaval in the broader marketplace caused by the coronavirus crisis.
Tegna’s statement is the company’s first acknowledgement that it has received four unsolicited acquisition offers in recent weeks. Two of those have since been withdrawn while the other two have yet to progress in the due diligence process, nor have the bidders advised Tegna leaders on financing specifics, according to Tegna.
The suitors who have bowed out are believed to be Atlanta-based Gray Television, which fielded a cash-and-stock offer valuing Tegna at $20 a share, or about $8.5 billion earlier this month. Private equity giant Apollo Global Management followed with an all-cash offer in the same range. Tegna owns 62 network-affiliated TV stations serving 51 large and mid-sized markets.
After the historic losses in U.S. equities markets over the past three weeks, Tegna shares have fallen to $13.21 as of the close of trading on Friday. The stock was in the $16-$17 range at the time the wave of bids surfaced.
In addition to Gray and Apollo, entrepreneur Byron Allen is said to have fielded an all-cash offer along with religious broadcast group Trinity in partnership with Phoenix-based private equity firm Najafi Companies. Najafi and Trinity on March 17 announced they had notified Tegna’s board of directors of its intent to make an all-cash offer at $20 a share.
Tegna management, led by president-CEO Dave Lougee, has been under pressure from activist shareholder Soo Kim of investment firm Standard General to be more active at a time of continued consolidation of local TV station assets. Tegna is one of the last sizable collections of Big 4 affiliates up for grabs as a pure-play broadcaster.
Sunday’s statement marked Tegna’s first formal acknowledgement of acquisition activity since the mating dances began last month.
“As has been widely reported, Tegna has received four unsolicited acquisition proposals in recent weeks,” Tegna said in a statement. “Tegna and its advisors engaged substantially with two of these parties and provided them extensive non-public due diligence information. These two parties made their proposals shortly before the recent market dislocation due to the COVID-19 pandemic and both subsequently informed Tegna that they were ceasing discussions. The other two parties have not signed confidentiality agreements to enable due diligence and have not delivered any information on financing sources.”
Lougee said in a statement that the company’s immediate focus is on stabilizing business amid the economic shock of the business clampdown caused by aggressive social distancing measures.
“Like every other company, Tegna is operating in uncharted waters due to COVID-19 as we focus on ensuring the health and safety of our employees while continuing to create and preserve value,” Lougee said. “High-quality local news has never been more important, and we are fortunate to have significant contractual subscription revenues and a strong balance sheet with minimal near-term debt maturities. We are working through the current challenges raised by COVID-19 and are very confident that our long-term growth drivers remain intact.”
Standard General has proposed an alternative slate of five directors to join the Tegna board as part of its effort to push the company to act on the M&A front. Tegna management has strongly refuted Standard General’s criticisms and pointed to Kim’s mixed track record as an investor.
Tegna board chairman Howard Elias addressed the pressure to consider alternatives for the company — something that surely has been halted given the economic turmoil.
“In addition to our focus on executing our standalone plan, the Tegna board and management have meaningfully engaged with third parties to explore opportunities to create value,” Elias said in a statement. “The board has been, and remains, willing to consider transactions that create compelling value, and our focus now is on helping management navigate through an unprecedented environment.”