Sinclair Broadcast Group has officially made a bid to acquire Tribune Media for $3.9 billion after months of speculation.
The agreement will allow Sinclair to acquire 100% of the issued and outstanding shares of Tribune for $43.50 per share (or an aggregate purchase price of about $3.9 billion) plus the assumption of approximately $2.7 billion in net debt. The deal represents a 26% premium over Tribune's closing share price on Feb. 28, 2017.
The companies expect the deal to close in the fourth quarter after meeting regulatory approvals and closing conditions. Sinclair said that it may have to divest stations in markets where it currently owns stations in order to adhere to FCC ownership requirements and antitrust regulations.
Sinclair will be buying Tribune’s 42 television stations in 33 markets, cable network WGN America, digital multicast network Antenna TV, minority stakes in the TV Food Network and CareerBuilder, and a variety of real estate assets. The group will also gain 14 Fox affiliates, 12 CW, six CBS, three ABC, two NBC, three MyNetworkTV affiliates and two independent stations.
"This is a transformational acquisition for Sinclair that will open up a myriad of opportunities for the company," said Chris Ripley, president and CEO of Sinclair, in a statement. "The Tribune stations are highly complementary to Sinclair's existing footprint and will create a leading nationwide media platform that includes our country's largest markets. The acquisition will enable Sinclair to build ATSC 3.0 (Next Generation Broadcast Platform) advanced services, scale emerging networks and national sales, and integrate content verticals. The acquisition will also create substantial synergistic value through operating efficiencies, revenue streams, programming strategies and digital platforms."
David Smith, executive chairman of Sinclair, said that the Tribune transaction will be the largest acquisition in Sinclair’s history.
"Today's announcement is the culmination of an extensive strategic review, which has delivered significant value to our stockholders," said Peter Kern, CEO of Tribune, in a statement. "Since we announced the strategic review 15 months ago, we have streamlined the business, monetized non-core assets, strengthened our balance sheet and returned more than $800 million to stockholders—all of which has resulted in a 50% increase in stockholder value. We are extremely proud to join Sinclair, and we're excited that Tribune stockholders and employees will have the opportunity to participate in the long-term growth of the combined company."
Sinclair’s announcement today that a deal has been reached for Tribune matches up with earlier reports that Sinclair was looking to have an agreement in place by or before May 8. The price target in those early reports suggested Sinclair would buy Tribune for a high $30s per share price, well below the actual cost of $43.50 per share.
Of course, there is still a chance that Fox Television could swoop in with a competing offer. Fox is reportedly working with Blackstone to help fund a joint venture around acquiring Tribune.