Scripps rejects Sinclair’s unsolicited takeover offer
The board of directors of EW Scripps Co. has unanimously rejected the unsolicited takeover proposal submitted by Sinclair, the second-largest group of U.S. TV station owners, Scripps announced Tuesday.
Sinclair had offered $7 per share (in a mix of cash and stock) for shares in Scripps it does not already own on November 24; it had previously acquired a 9.9% stake in Scripps. The Sinclair acquisition came on the back of Nexstar Media Group’s $6.2 billion deal for Tegna, which would expand the reach of Nexstar, the largest TV station owner group in the US.
Scripps said in a Dec. 16 statement: “The Scripps board, after careful review and evaluation in consultation with its financial and legal advisors, has determined 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, Scripps’ chairman of the board, said in a statement: “The board is committed to acting in the best interests of all Scripps stockholders, as well as the company’s employees and the many communities and audiences it serves across the United States. After careful consideration, the Scripps board has determined that Sinclair’s unsolicited acquisition proposal is not in the best interests of Scripps and its stockholders. Nevertheless, the board remains and will continue to be open to evaluating opportunities to enhance shareholder value consider any action, including any takeover proposal, that is in the best interests of all shareholders.”
Sinclair operates and/or provides services to 185 television stations in 85 markets, while Scripps has more than 60 stations in more than 40 markets. According to Sinclair, upon completion 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% ownership limit: “We are confident that under existing rules, including the national limit, the transaction [with Scripps] can be completed on time with a limited number of divestments.”
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), Sinclair said. Sinclair estimated that the unified company would have about $325 million in cost synergies.
