On Monday (2/28), TEGNA will release its fourth quarter 2021 earnings and host an earnings call including such C-Suite leaders as Lynn Beall, Victoria Harker and CEO Dave Lougee.
In addition to discussing its financial performance during the quarter, the company formerly known as Gannett could discuss some much bigger news on that day.
It will involve Lougee’s pending departure, and it could include an individual who until recently was viewed as a dissident shareholder.
Majority control in TEGNA, pending regulatory approval, is to be sold to a partnership involving Soohyung Kim and the majority shareholder in Cox Media Group.
As first reported Monday afternoon by Bloomberg and confirmed Tuesday at 7am Eastern by TEGNA, Kim’s Standard General and Apollo Global Management have engineered a deal acquire TEGNA at the previously reported price of $24 per share.
TEGNA is poised to open Tuesday’s trading at $20.95 per share, and the offer presents a premium.
How big is that premium? TGNA hasn’t been near $24 per share since June 2007. TEGNA acknowledges that it is a premium of approximately 11% to TEGNA’s all-time high closing price since separation from the Gannett publishing business in 2015.
The transaction — unanimously approved by the TEGNA Board — has an equity value of approximately $5.4 billion and an enterprise value of approximately $8.6 billion, including the assumption of debt, TEGNA says.
Howard D. Elias, Chairman of the TEGNA Board, commented, “We are pleased to have reached this agreement with Standard General, which follows a thorough review of acquisition proposals received by the company.”
The other bidder said to actively be seeking a majority stake in TEGNA: Byron Allen and his Allen Media Group. Neither TEGNA nor Allen have commented publicly on this interest.
Elias continued, “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.”
Indeed, TEGNA will be privatized; trading on the NYSE is expected to cease upon closing, expected in the second half of 2022.
Elias will no longer be board chairman, as Soo will be forming a new one following closing.
‘TICKING FEE’ SCHEDULE IN PLACE
Bloomberg’s report on Monday outlined much of the terms spelled out in the official announcement.
First, “in a nod to potential antitrust scrutiny of the deal,” Standard General and Apollo will pay an additional amount per share for each month that any regulatory review takes after an initial period. The price increases by incremental amounts from 5 cents per share after the first nine months, up to 12.5 cents per share in the 15th month and beyond — assuming any approval wouldn’t come until May 2023. Beneficiaries are TEGNA’s shareholders.
Apollo would receive preferred shares in TEGNA but, as previously reported by Bloomberg, it would not have voting rights, so as not to interfere with its Cox Media Group investment.
Officially, an affiliate of Standard General will hold substantially all of the voting and 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.
J.P. Morgan Securities LLC is acting as lead financial advisor, with Greenhill & Co. also acting as a financial advisor to TEGNA. 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.
A HOST OF CHANGES TO COME
In order to meet regulatory approval, given the plan to make Apollo Global Management a non-voting equity interest holder in TEGNA, upon closing the following stations would be transferred to Cox Media Group, making it the licensee:
- ABC affiliate KVUE-24 in Austin
- ABC affiliate WFAA-8 and Estrella TV affiliate KMPX-29 in Dallas-Fort Worth
- CBS affiliate KHOU-11 and Quest-affiliated KTBU-55 in Houston
Furthermore, the OTT programmatic advertising operation Premion will be operated as a standalone business, majority-owned by Cox Media Group and Standard General.
