Nexstar Announces Deal to Buy Tribune for $6.4B

03/12/2018

Nexstar Media Group officially announced Monday that it reached an agreement to acquire Tribune Media, creating the company's largest local broadcasting company.

Nexstar will be paying $46.50 in cash and values the transaction at $6.4 billion, including the assumption of Tribune's debt. The cash portion is valued at $4.1 billion.

Nexstar has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies, said Nexstar CEO Perry Sook.

Nexstar CEO Perry Sook

We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today's rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate," Sook said. "As with our past transactions, we have developed a comprehensive regulatory compliance plan and believe we have a clear path to closing. With committed financing and a plan for significant synergy realization that will result in only a minimal increase in Nexstar's pro-forma leverage, the combined entity will be poised for growth, leverage reduction and increased capital returns for shareholders.

In the deal, Nexstar would be getting 42 TV stations, cable network WBN America, and a 31% stake in Food Network.

The combined company would have 216 combined, pre-divestiture full power, owned or serviced, television stations in 118 markets and rapidly growing digital media operations. It would reach reach 39% of U.S. TV households, which will fit under the FCC's current formula including the discount for UHF stations.

After acquiring Tribune, Nexstar would have pro-forma annual revenue of approximately $4.6 billion and pro-forma adjusted EBITDA of approximately $1.7 billion.

We are delighted to have reached this agreement with Nexstar as it provides Tribune shareholders with substantial value and a well-defined path to closing," said Peter Kern, CEO of Tribune Media. "Together with Nexstar we can better compete by delivering a nationally integrated, comprehensive and competitive offering across all our markets. We believe this combination will produce an even stronger broadcast and digital platform that builds on the accomplishments of both companies and benefits our viewers and advertisers. The premium value our shareholders are receiving reflects the hard work of our dedicated Tribune employees in maximizing the value of our portfolio. I look forward to working closely with the Nexstar team to deliver on the value of this compelling combination and to ensure a smooth transition and integration of our companies.

The price reflects a 15.5% premium for Tribune Media shareholders based on Friday's closing stock prices. It is 45% higher than on July 16, when the FCC chairman issued a statement indicating that the previously announced deal for Sinclair Broadcast Group to acquire Tribune would face more review, essentially a signal that deal was almost certainly not going through.

Tribune shareholders will get about 30 cents per month if the transaction is not closed by Aug. 31, 2019.

Nexstar expects the deal to be accretive, pointing to operating synergies of about $160 million in the first year following the completion of the transaction and divestitures that are planned.

The new combined company will reach 39% of U.S. TV households, which will fit under the FCC's current formula including the discount for UHF stations.

Nexstar has argued at the FCC that the 39% cap should go away entirely, but that is unlikely to happen, at least in the near term.

In the deal, Nexstar would be getting 42 TV stations, cable network WGN America, and a 31% stake in Food Network.

LINK:	https://www.broadcastingcable.com/news/nexstar-announces-deal-to-buy-t...
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