Announcement • Dec 02
Gray Television, Inc. (NYSE:GTN) completed the acquisition of Meredith Corporation (NYSE:MDP) from a group of shareholders.
Gray Television, Inc. (NYSE:GTN) entered into an agreement to acquire Meredith Corporation (NYSE:MDP) from a group of shareholders for $2.7 Billion on May 3, 2021. As consideration, each common stock and Class B common stock of Meredith shall be converted into the right to receive $14.51 in cash and Gray will either assume or repay $1.975 billion of net debt at closing. The transaction will include all LMG properties except MNI Targeted Media and People TV Syndication [PEOPLE (the TV Show)], which will remain with the national media group division. The transaction has an enterprise value of $2.7 billion. As of June 2, 2021, Gray Television, Inc. entered into an amended agreement to acquire Gray Television, Inc. from a group of shareholders for $2.825 billion. Meredith shareholder would now receive $16.99 per share under the revised proposal. As per the amendment, the enterprise value would be $2.825 billion. Furthermore, the Target Net Debt Amount would be an amount equal to $1.975, which is subject to closing adjustments.
In a related transaction, Meredith entered into a Separation and Distribution Agreement to separate its local media group and national media group operations into two independent companies by distributing to Meredith’s shareholders. Pursuant to the Separation and Distribution Agreement, the company being spun off will assume the assets and liabilities primarily related to Meredith’s national media group and corporate segments and Meredith will retain the assets and liabilities primarily related to Meredith’s local media group, subject to certain exceptions as set forth therein. Immediately prior to the Gray acquisition close, Meredith will spin its digital, magazine, MNI, PEOPLE TV, and corporate operations out to its shareholders as a new company, Meredith Holdings Corp., that IAC's Dotdash has agreed to acquire for $2.7 billion. Gray intends to fund the transaction with a combination of cash on hand and committed debt financings underwritten by Wells Fargo from RBC and Barclays with an incremental term loan facility of $1.45 billion and a bridge facility of $1.35 billion. On June 2, 2021, Gray entered into a second amended and restated financing “Commitment Letter” that provides for debt financing for a portion of the purchase price to complete the Meredith Transaction consisting of an incremental term loan facility in an aggregate principal amount of $1.45 billion (the “2021 Term Loan”); a bridge facility in an aggregate principal amount of $1.475 billion (the “2021 Bridge Facility”) and an amendment to the Revolving Credit Facility to increase the commitment thereunder to $425 million. Upon completion, Meredith is expected to maintain its dual-class stock structure and continue trading on the New York Stock Exchange under the ticker MDP. Upon termination of the transaction, Meredith would be required to pay Gray a termination fee of $36 million and Gray will be required to pay a termination fee to Meredith of $125 million. As per the amended agreement, Meredith would be required to pay Gray a termination fee of $113 million. Meredith will be led by existing senior executive team with Tom Harty as Chairman and Chief Executive Officer and Jason Frierott as Chief Financial Officer and the rest of the senior NMG and corporate leadership team is expected to remain in place. The Board is expected to remain in place as well. Meredith will remain headquartered in Des Moines, Iowa. As of November 18, 2021, Gray Television has appointed several new General Managers across its television station portfolio. The appointments will become effective at the closing of the transaction.
The transaction is subject to the approval from shareholders of Meredith, completion of the Separation and Distribution Agreement and the effective registration of the company being spun off’s common stock under the Securities Exchange Act with the Securities and Exchange Commission, the effectiveness of the Spin-Off Registration Statement on Form 10, satisfaction or waiver of certain other customary conditions, including, receipt of approval from the Federal Communications Commission and the expiration of the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and certain customary third party consents. The transaction is not subject to any Gray financing condition. The transaction has been unanimously approved by the board of directors of Gray and Meredith. To facilitate regulatory approvals for this transaction, Gray will divest WJRT-TV to an independent third-party no later than the closing of the transaction. The revised proposal has also been unanimously approved by board of Meredith. Meredith’s Board continues to recommend that its shareholders approve the proposed transaction with Gray. The Federal Communications Commission accepted Meredith and Gray's applications for the transaction's approval on May 26, 2021. On October 8, 2021, the Department of Justice announced the early termination of the waiting period under the HSR Act. The special meeting of shareholders of Meredith will be held on November 30, 2021. As of November 12, 2021, the FCC approval was received. The transaction is still expected to close in the fourth quarter of calendar 2021. As of November 12, 2021, the transaction is expected to close on December 1, 2021. As of November 30, 2021, the transaction has been approved by the shareholders of Meredith. The transaction will be significantly accretive to free cash flow per share and represents a multiple of approximately 7.9 times a blended average of the Meredith television stations’ 2019/2020 operating cash flow.
Wells Fargo Securities, LLC served as financial advisor and William Dudzinsky of Eversheds Sutherland (US) LLP and Mark L. Hanson of Jones Day acted as legal advisor to Gray Television, Inc. Kevin Mills, Aaron Binstock and Michael Basile of Cooley LLP acted as legal advisors to Meredith. Moelis & Company LLC acted as the financial advisor to Meredith and fairness opinion provider to the Board of Meredith. BDT & Company served as financial co-advisor and Lazard Ltd (NYSE:LAZ) served as a strategic advisor for Meredith. Innisfree M&A Incorporated acted as proxy solicitor to Meredith Corporation for a fee of approximately $75,000. Moelis will receive fee for its services, estimated to be approximately $33.6 million in the aggregate, $2.5 million of which was earned in connection with the delivery of Moelis’ opinion.
Gray Television, Inc. (NYSE:GTN) completed the acquisition of Meredith Corporation (NYSE:MDP) from a group of shareholders on December 1, 2021. The Meredith acquisition will increase Gray’s net revenues and expenses in the fourth quarter 2021.