TV-station empire Tegna has hit a roadblock in negotiations with suitors who need to purchase the corporate in a deal price $8.4 billion, sources near the state of affairs mentioned.
Hedge fund Normal Common and Apollo International Administration on Nov. 22 raised their absolutely financed supply for Tegna from $22 to $22.65 a share, valuing the corporate at roughly $5 billion and in addition agreeing to imagine the corporate’s $3.4 billion in debt, sources near the state of affairs mentioned.
Tegna shares on Friday have been lately off 0.3 p.c at $19.80 in early afternoon trades.
The raised bid got here after Tegna had failed to just accept or reject the preliminary supply which was made two months earlier, in response to the sources.
A collapse in talks would signify the third time in as a few years that Tegna — spun off from newspaper giant Gannett in 2015 as a separate, publicly traded firm — has weighed a doable sale solely to have it scrapped ultimately. The Virginia-based firm operates 64 tv and two radio stations throughout 54 US markets.
In current weeks, insiders say Tegna has requested the bidders to conform to a “hell or excessive water” situation, which means they might not stroll away from the merger irrespective of how lengthy it took to get by regulators. Tegna additionally has demanded a higher-than-normal breakup payment of about $500 million, sources mentioned.
Normal Common and Apollo are snug with the primary situation however have countered with a breakup payment about half as large, sources mentioned.
Sources mentioned Tegna has voiced concerns whether the Standard General and Apollo bid can stand up to antitrust scrutiny from the Federal Communications Fee. The FCC’s nationwide media possession rule prohibits any entity from proudly owning business tv stations that attain greater than 39 p.c of US tv households nationwide.
Tegna’s stations mixed with people who Apollo and Normal Common already personal would surpass that mark. Apollo plans although to maintain its present stations and Tegna separate, sources mentioned.
There are not any different suitors with agency affords for Tegna, insiders mentioned. That features Byron Allen, the comedian-turned-media-mogul who owns the Climate Channel — who for nearly a yr has been trying to put together a Tegna bid. Whereas Allen repeatedly mentioned he has the cash, he hasn’t but confirmed it, in response to sources.
Allen declined to remark.
Tegna, in the meantime, has signaled it believes it’s price over $25 a share and negotiations have stalled.
By year-end, a deal will possible come collectively or Tegna will announce it’s remaining public, sources near the state of affairs mentioned. The corporate’s shares that are hovering Friday round $20 a share would possible fall to about $18 and not using a deal, a hedge fund supervisor following the state of affairs mentioned.
This case is taking up a well-recognized sample.
In 2019, Tegna confirmed it rejected a takeover supply from Apollo. In early 2020, Tegna began a gross sales course of getting bids from Grey Tv and Apollo at reportedly $20 a share. Tegna canceled that course of when the COVID pandemic began and debt markets grew to become uneven.
Tegna on this gross sales course of acquired Soo Kim’s Normal Common — which launched an unsuccessful proxy contest in opposition to it this spring —to signal an settlement it might not interact in one other proxy contest for greater than a yr, sources mentioned.
Kim had highlighted throughout the heated proxy combat that the corporate had been hit with racial discrimination and sexual harassment suits. Some insiders now suspect that Tegna could have been extra involved in getting that concession than in promoting itself, sources mentioned.
Normal Common has made it clear if it purchased Tegna it might change CEO David Lougee.
Tegna declined to remark.