Media General said Wednesday that its board is still open to exploring an improved proposal from Nexstar Broadcasting Group, but the one unanimously rejected “materially undervalues Media General and its prospects and is not in the best interests of Media General’s shareholders.”
Nexstar announced Wednesday morning that negotiations had reached an impasse and Media General had rejected its new offer. However, Media General said it specifically asked Nexstar for its “best and final” proposal in a Dec. 6 letter and, instead of doing that and continuing to negotiate privately, Nexstar issued the press release repeating the already rejected prior proposal.
“We note that it is unclear from Nexstar’s press release if its current proposal is indeed its best and final proposal,” Media General said.
Media General added that it has been negotiating with Nexstar in good faith over the last few weeks but was surprised by Wednesday morning’s release. The $16.31 per share Nexstar offered is down from the $17 in its original Aug. 10 proposal.
This news seems to be a bit of a turnaround, as the momentum had seemed to be in Nexstar’s favor. Back in early November, Perry Sook, the chairman, president and CEO of Nexstar, was confident his company would acquire Media General when it was all said and done. “Past history and recent results, both ours and those of other involved parties, indicate that we should prevail in our efforts to acquire Media General,” he said.
Not long after, Media General’s board unanimously decided to negotiate with Nexstar, though it said the bid at the time undervalued the company and rejected the offer. Meredith responded that it was confident that a merger with Media General would “generate superior shareholder value – over both the near- and long-term – as compared to a potential Nexstar transaction."
However, throughout all of this, as Nexstar Broadcasting Group offered an unsolicited $4.1 billion bid for Media General, major shareholders came out in favor of the deal and the two companies struck up negotiations, Media General has continued to reaffirm that its board favored the original $2.4 billion merger with Meredith Corp.
Expect Media General and Meredith to proceed with their current deal, said analysts at Wells Fargo Securities in a research report, “although we have a hunch that the Nexstar-Media General saga is not totally over. We think a lot of what we are reading is just negotiating in the press.”
The report said the two companies will agree on an amount between Nexstar’s offer of $16.31 and the $18.61 Media General wants, “at which point (Meredith) might somehow try to squeeze its way in, as a few investors have suggested (but which many just don’t believe).”
Steve Schwaid, VP of digital strategy at consulting firm CJ&N, who has worked with both Meredith and Media General, predicts Media General and Meredith will end up together, pointing to the Meredith’s digital prowess, from print properties like Better Homes and Gardens to sites like AllRecipe.com, and the leadership of Meredith CEO Steve Lacy, who would lead the Meredith Media General as CEO and president if it came to be.
"The (Nexstar) momentum was driven more by Wall Street than by anything else,” Schwaid said. “Who knows if it’s over or not.”