Cumulus In Exclusive Negotiations To Buy Citadel
February 17, 2011 at 1:08 PM (PT)
CITADEL BROADCASTING is now confirming the report earlier today by CNBC and MPECAPITOL.COM that CUMULUS MEDIA is in exclusive negotiations to purchase CITADEL in a $37/share deal; $30/share will be in cash and $7/share in CMLS stock. According to a CITADEL release, the deal "would on average be capped at $30.00 per share in cash and at $14.00 per share in CUMULUS stock at a fixed exchange ratio. Based on actual elections made by CITADEL shareholders and subject to proration, each CITADEL shareholder could individually receive more or less cash or CUMULUS stock than these amounts, up to the $37.00 per share total."
CUMULUS' proposal is being made with CRESTVIEW PARTNERS and MACQUARIE CAPITAL providing up to $500 million in equity financing, with the rest coming from debt financing led by UBS INVESTMENT BANK and MACQUARIE. The CITADEL release indicates that the deal is not yet complete and subject to due diligence and financing arrangements.
J.P. MORGAN and LAZARD are acting as financial advisors and WEIL, GOTSHAL & MANGES LLP is acting as legal advisor to CITADEL, while UBS is acting as financial advisor and JONES DAY is acting as legal advisor to CUMULUS.
The mere mention of the negotiations has sent the stock prices of both parties soaring. Shares of CUMULUS MEDIA has jumped 12.30% to $4.84, off 52-week high of $5.78. Shares of CITADEL BROADCASTING also soared 16.67% to $35.
The NEW YORK TIMES reports that the talks "began this week, are ongoing and may still fall apart." Citadel’s management has expressed concern about taking on "a significant amount of debt" in selling to CUMULUS; last DECEMBER is turned down a deal valued at $31 a share.
However, more than a few influential CITADEL shareholders went public with their disappointment with the Board's disinterest in making a deal, as well as a $400 million debt offering that CITADEL announced shortly after CUMULUS’ offer was made public -- to be used as a hedge against a hostile takeover -- and $110 million in stock grants to Citadel executives, including CEO FARID SULEMAN. The grants were rescinded in mid-NOVEMBER.
According to Capital IQ, CITADEL currently operates 225 stations in 67 markets , worth approximately $2.09 billion, while CUMULUS oversees 344 stations in 68 markets, valued at $779.4 million.