In a deal announced this morning, an affiliate of investment firm Standard General LP will acquire TEGNA for $24.00 per share in cash with an equity value of approximately $5.4 billion and an enterprise value of approximately $8.6 billion, including the assumption of debt. The deal will also include the divestiture of Standard’s current television station group to Cox Media Group and two other transfers between Standard and Cox.
Cox will acquire TEGNA’s KVUE-TV Austin, WFAA and KMPX Dallas, and KHOU and KTBU Houston as well as Standard Media’s KBSI Cape Girardeau MO, KLKN Lincoln NE, WDKA Paducah KY, and WLNE-TV New Bedford MA/Providence RI, while divesting WFXT Boston. In particular of note is that Cox already owns a radio cluster in Houston including County “93Q” 92.9 KKBQ, “Country Legends 97.1” KTHT, and Classic Rock “107.5/106.9 The Eagle” KGLK/KHPT.
In its purchase of TEGNA, Standard General receives two radio stations itself adding the Sports duo of “97.1 The Fan” WBNS-FM and “ESPN 1460” WBNS Columbus OH.
This will not be Standard General’s first foray into radio. MediaCo Holdings, a separate, publicly traded, company held by Standard General owns Hip Hop “Hot 97” WQHT and Adult R&B 107.5 WBLS New York.
TEGNA Inc. (NYSE: TGNA) and Standard General L.P. today announced that TEGNA and an affiliate of Standard General have entered into a definitive agreement under which TEGNA will be acquired by the Standard General affiliate for $24.00 per share in cash. The transaction has an equity value of approximately $5.4 billion and an enterprise value of approximately $8.6 billion, including the assumption of debt.
The transaction consideration represents a premium of approximately 39% to TEGNA’s unaffected closing share price on September 14, 2021, the last full trading day prior to media speculation about a potential sale of TEGNA, and a premium of approximately 11% to TEGNA’s all-time high closing price since separation from the Gannett publishing business in 2015. The transaction was unanimously approved by the TEGNA Board.
Howard D. Elias, Chairman of the TEGNA Board, said, “We are pleased to have reached this agreement with Standard General, which follows a thorough review of acquisition proposals received by the Company. After evaluating this opportunity against TEGNA’s standalone prospects and other strategic alternatives, our Board concluded that this transaction maximizes value for TEGNA shareholders. Thanks to the team’s stellar execution of the Company’s value-creation strategy, TEGNA has positioned itself as a leading broadcast television group serving the greater good of the communities in which we operate – and as a private company will have an enhanced ability to keep evolving its local news, programming, and marketing solutions to serve its communities in a rapidly changing media landscape.”
Soo Kim, Founding Partner of Standard General, commented, “As long-term investors in the television broadcasting industry, we have a deep admiration for TEGNA and the stations it operates and, in particular, for TEGNA’s talented employees and their commitment to serving their communities. We are excited to partner again with Deb McDermott, who previously spearheaded the broadcast group at Media General, where Standard General was a principal shareholder. We believe TEGNA has a strong foundation and exciting prospects for continued growth as a result of the stewardship of the Board and the current management team. We look forward to building on the Company’s strong foundation and leveraging Deb’s deep industry experience to drive further growth.”
Following the close of the transaction, Deb McDermott will become CEO and Mr. Kim will serve as Chairman of a new Board. Ms. McDermott currently serves as CEO of Standard Media and has more than 20 years of experience leading broadcast groups, including previously serving as COO of Media General and as CEO and President of Young Broadcasting. In these roles, she has served as a key member of the leadership teams responsible for the successful acquisition, integration, and operation of more than 90 stations.
Dave Lougee, President and CEO of TEGNA, said, “This transaction is the next step in TEGNA’s evolution and recognizes the value of our portfolio of leading broadcast assets and innovative digital brands. TEGNA’s employees deserve tremendous credit for their commitment to serving our viewers with high-quality news and content that informs and supports our local communities. At all levels, we have been tireless in our efforts to ensure TEGNA effectively serves all of our stakeholders, and I am immensely proud of these efforts. Our hard work has built a company that is a leading and trusted local news and media content provider in the markets it serves and has fostered a culture of diversity and inclusiveness. We are deeply gratified that TEGNA’s new owners value and embrace our purpose to serve the greater good of our communities. Deb McDermott is an experienced and accomplished broadcast executive, and we are confident in TEGNA’s future under her leadership.”
Ms. McDermott commented, “I am honored to lead TEGNA’s team to create new opportunities and build on its heritage and successes achieved under Dave’s leadership. TEGNA’s stations have earned excellent reputations as leading local content providers, and TEGNA’s digital and content assets are a key part of its future in an evolving media landscape. These achievements are a credit to the hard work of TEGNA’s dedicated employees, who are the Company’s most valuable asset. I’m very excited about what the future holds for TEGNA.”
Transaction Details
The transaction is subject to approval by TEGNA shareholders, regulatory approvals, and other customary closing conditions, and is expected to close in the second half of 2022.
Under the terms of the definitive merger agreement, in addition to receiving $24.00 per share, TEGNA shareholders will receive additional cash consideration in the form of a “ticking fee” of $0.00167 per share per day (or $0.05 per month) if the closing occurs between the 9- and 12-month anniversary of signing, increasing to $0.0025 per share per day (or $0.075 per month) if the closing occurs between the 12- and 13-month anniversary of signing, $0.00333 per share per day (or $0.10 per month) if the closing occurs between the 13- and 14-month anniversary of signing, and $0.00417 per share per day (or $0.125 per month) if the closing occurs between the 14- and 15-month anniversary of signing.
Following the close of the transaction, TEGNA stations in Austin (KVUE), Dallas (WFAA and KMPX) and Houston (KHOU and KTBU) are expected to be acquired by Cox Media Group (“CMG”) from Standard General.
Also after closing, Premion is expected to operate as a standalone business majority owned by Cox Media Group and Standard General.
Upon completion of the transaction, TEGNA will become a private company and its shares will no longer be traded on the New York Stock Exchange.
Financing
An affiliate of Standard General will hold substantially all of the voting, common equity in the new entity that is acquiring TEGNA, with CMG and funds managed by affiliates of Apollo Global Management to hold securities in the new entity that will be non-voting and non-attributable and with other investors holding non-voting interests. A syndicate of banks led by RBC Capital Markets will provide debt financing.
Advisors
J.P. Morgan Securities LLC is acting as lead financial advisor, with Greenhill & Co. also acting as a financial advisor to TEGNA, and Wachtell Lipton Rosen & Katz and Covington & Burling LLP are acting as its legal advisors. Moelis & Company and RBC are acting as financial advisor to Standard General and Fried Frank Harris Shriver & Jacobson LLP and Pillsbury Winthrop Shaw Pittman LLP are acting as its legal advisors.
Standard General L.P. and Cox Media Group (CMG) today announced four transactions in which, first, CMG will acquire the station group currently owned by Standard General’s affiliate, Community News Media LLC (CNM), and, in a second, subsequent transaction, a Standard General affiliate will acquire CMG’s WFXT/Boston as the anchor of a new station group. Following the close of those two transactions, the Standard General affiliate will acquire TEGNA, in a take-private deal that Standard General and TEGNA separately announced today.
In a subsequent transaction that would follow the Standard General affiliate’s acquisition of TEGNA, CMG will acquire TEGNA’s Austin, Texas station, KVUE-TV, its Dallas stations, WFAA and KMPX, and its Houston stations, KHOU and KTBU.
Soo Kim, Founding Partner of Standard General L.P., said, “We are delighted to be acquiring WFXT/Boston, which will serve as a foundation for our new station group and provide our new company with a historic legacy from its very start.”
With respect to Standard General’s sale of its CNM stations to CMG, Kim added, “We appreciate the many contributions of our dedicated station employees and are confident that they will have great futures at CMG, an exceptional broadcast group with a strong commitment to the communities it serves.”
CMG’s President and CEO, Dan York said, “We will be pleased to welcome the strong talent at CNM and at TEGNA’s stations in Austin, Dallas and Houston into the CMG family. The opportunity to grow in these CNM and Texas markets further complements CMG’s existing core strengths.”
Of the sale of the Boston station, York added, “We will miss the dedicated team at WFXT Boston25, but we know they will form an ideal foundation for Standard General’s new company and its further growth.”
The CNM stations to be acquired by CMG are:
· KBSI (Fox) – Cape Girardeau, Missouri
· KLKN (ABC) – Lincoln, Nebraska
· WDKA (MyNet) – Paducah, Kentucky
· WLNE-TV(ABC) – New Bedford, Massachusetts
An affiliate of Standard General will hold substantially all of the voting, common equity in the new entity that is acquiring TEGNA, with CMG and funds managed by affiliates of Apollo Global Management to hold securities in the new entity that will be non-voting and non-attributable and with other investors holding non-voting interests. Mr. Kim will serve as Chairman and Deb McDermott will become CEO of the new entity that will own and operate the new station group.
The transactions are subject to customary closing conditions, including applicable regulatory approvals. The parties expect to close the announced transactions in the second half of 2022.