The board of directors of EW Scripps Co. unanimously rejected the unsolicited acquisition proposal submitted by Sinclair, the second-largest television station ownership group in the United States, Scripps announced Tuesday.
On November 24, Sinclair had offered $7 per share (in a combination of cash and stock) for shares of Scripps that it did not already own; it previously acquired a 9.9% stake in Scripps. Sinclair’s takeover decision comes as part of Nexstar Media Group’s $6.2 billion deal for Tegna, which would expand the reach of Nexstar, the largest television network ownership group in the United States.
Scripps said in a Dec. 16 statement: “The Scripps Board of Directors has determined, after careful review and evaluation in consultation with its financial and legal advisors, that Sinclair’s offer is not in the best interests of the Company and its shareholders. »
Representatives for Sinclair did not immediately respond to request for comment.
Kim Williams, chairwoman of the Scripps Board of Directors, said in a statement: “The Board of Directors is committed to acting in the best interests of all Scripps shareholders as well as the Company’s employees and the many communities and publics it serves across the United States. After careful consideration, the Scripps Board of Directors has determined that Sinclair’s unsolicited acquisition proposal is not in the best interests of Scripps and its shareholders. The Board of Directors nevertheless remains open to evaluating opportunities to increase shareholder value and will continue to consider any action, including any acquisition proposal, that is in the best interest of all shareholders.
Sinclair operates and/or provides service to 185 television stations in 85 markets, while Scripps has more than 60 stations in more than 40 markets. According to Sinclair, upon closing of the Scripps acquisition, Scripps shareholders would own approximately 12.7% of the combined entity.
In the SEC filing, Sinclair commented on the FCC’s current 39% shareholding limit: “We believe that under existing rules, including the national cap, the transaction [with Scripps] can be achieved in a timely manner with selected and limited assignments.
Under Sinclair’s proposal, the combined Sinclair-Scripps company would have a market capitalization of $2.9 billion, based on a 7:1 ratio of enterprise value to EBITDA (earnings before interest, taxes, depreciation and amortization), according to Sinclair. Sinclair estimated the unified company would have about $325 million in cost synergies.
