As a Cumulus Media shareholder intends to increase its holding in the company to 20% of the company, Cumulus has instituted a limited-duration shareholders rights plan to impose a significant penalty on any person or group becoming the holder of 15% or more of their Class A Common Shares without the prior approval of the Board to ward off a hostile takeover of the company.
The plan will see the authorization of the issuance of one Right per each outstanding Common Share as of February 21. If exercised the holder of a Class A Right can purchase one ten-thousandth of a Class A Common Share for a purchase price of $25.00 and each Class B Right would allow its holder to purchase from the Company one ten-thousandth of a Class B Common Share for a purchase price of $25.00. After distribution the Rights will separate from the Common Shares and be evidenced by right certificates. The Rights will expire on February 20, 2025. Cumulus’s Board of Directors may redeem all of the Rights for a price of $0.001 per Right at any time before the date of the Company’s first public announcement or disclosure that a person or group has become an Acquiring Person.
The plan was triggered as Singapore based Renew Group Private Ltd. has increased its investment in Cumulus. Renew Group Private originally acquired approximately 5.15% of the company’s Class A shares in July 2023 before reporting ownership of approximately 10.01% in January. In discussions with Cumulus leadership, the group stated its intent to acquire 20% of the company.
The Cumulus investments were driven by Five Hour Energy founder Manoj Bhargava,
Renew Group also is a debt-holder in Audacy and owns Bridge News, the owners of television networks NEWSnet and Shop HQ, which is in the process of merging with The Arena Group, which publishes Sports Illustrated, TheStreet, Parade Media, and Men’s Journal.
INSTANT INSIGHT: The Arena Group is the company that recently announced its plans to lay off the entire editorial staff of Sports Illustrated after missing a licensing payment to the owner of the SI brand. Arena claimed last week it is trying to reach a new licensing deal to continue publishing Sports Illustrated despite owing Authentic Brands $45 million.
The companies operate in running media properties on an ultra-bare bone basis. Content is repurposed across platforms, including AI generated content. A hostile takeover of Cumulus would likely see the gutting of their stations beyond a recognizable level.
Cumulus Media Inc. (NASDAQ: CMLS) (“Cumulus Media” or the “Company”) today announced that its Board of Directors (the “Board”) has adopted a limited-duration shareholder rights plan (“Rights Plan”) to protect the best interests of all Cumulus Media shareholders. The Rights Plan is effective immediately and will expire on February 20, 2025. The Board may consider an earlier termination of the Rights Plan if circumstances warrant.
The limited-duration Rights Plan was adopted in response to the significant accumulation of Cumulus Media stock by Renew Group Private Ltd., an entity based in Singapore (together with its affiliates, the “Group”). In adopting the plan, the Cumulus Board considered, in consultation with legal and financial advisors, among other things, that:
The Group initially disclosed that it had acquired approximately 5.15% of the Company’s outstanding Class A shares in a Schedule 13G filing on July 28, 2023;
On January 24, 2024, the Group converted its filing to a Schedule 13D and reported beneficial ownership of approximately 10.01% of the Company’s outstanding Class A shares;
In meetings with members of Cumulus Media leadership in the weeks following the Group’s Schedule 13D filing, the Group stated its intent to acquire 20% of the Company; and
The Group has investments in other media companies, including a sizeable holding in a direct competitor of Cumulus Media.“Given the facts, the Cumulus Board firmly believes it is necessary to adopt a limited-duration rights plan to protect the interests of all Cumulus shareholders. The Rights Plan is intended to enable the Company’s shareholders to realize the long-term value of their investment, ensure that all shareholders receive fair and equal treatment in the event of any proposed takeover of the Company, and guard against tactics to gain control of the Company without paying all shareholders an appropriate premium for that control,” said Andrew Hobson, Chairman of the Board. He continued, “Cumulus Media’s leadership maintains open dialogue with its investors, including the Group, and intends to continue that practice.”
The Rights Plan applies equally to all current and future shareholders and is not intended to deter offers or preclude the Board from considering offers that are fair and otherwise in the best interest of the Company’s shareholders. The Rights Plan is similar to plans adopted by other publicly traded companies. Pursuant to the Rights Plan, Cumulus Media is issuing one right (“Right”) for each share of Class A and Class B common stock as of the close of business on March 4, 2024. The Rights will initially trade with Cumulus Media common stock and will generally become exercisable only if any person (or any affiliates, associates or persons acting as a group) acquires 15% or more of the Company’s outstanding Class A common stock (the “Triggering Percentage”), including through ownership of the Company’s Class B common stock. The Rights Plan does not aggregate the ownership of shareholders “acting in concert” unless and until they have formed a group under applicable securities laws. If the rights become exercisable, all holders of Rights (other than any triggering person) will be entitled to acquire shares of Class A common stock or Class B common stock, as applicable, at a 50% discount or the Company may exchange each Right held by such holders for one share of Class A common stock or Class B common stock, as applicable. Under the Rights Plan, any person which currently owns more than the Triggering Percentage may continue to own its shares of common stock but may not acquire any additional shares without triggering the Rights Plan. Except as provided in the Rights Plan, the Board is entitled to redeem the Rights at $0.001 per Right.
This story first appeared on radioinsight.com