The board of E.W. Scripps Co. unanimously rejected the unsolicited acquisition proposal submitted by Sinclair, the second-biggest U.S. TV station owner group, Scripps announced Tuesday.
Sinclair on Nov. 24 had offered $7 per share (in a mix of cash and stock) for stock in Scripps that it does not already own; it previously had acquired a 9.9% stake in Scripps. Sinclair’s takeover move came amid Nexstar Media Group’s $6.2 billion deal for Tegna, which would expand the reach of Nexstar, the No. 1 biggest TV station owner group in the U.S.
Scripps said in a Dec. 16 statement, “The Scripps board determined, following a 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.”
Reps for Sinclair did not immediately respond to request for comment.
Kim Williams, the chair of Scripps’ board, said in a statement, “The board is committed to acting in the best interests of all Scripps shareholders as well as the company’s employees and the many communities and audiences it serves across the United States. After careful consideration, Scripps’ board determined that Sinclair’s unsolicited acquisition proposal is not in the best interests of Scripps and its shareholders. The board nonetheless remains open to evaluating opportunities to enhance shareholder value and will continue to consider any course of action, including any acquisition proposal, that is in the best interest of all shareholders.”
Sinclair operates and/or provides services to 185 TV stations in 85 markets, while Scripps has more than 60 stations in 40-plus 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% ownership limit: “We are confident that under existing rules, including the national cap, the transaction [with Scripps] can be completed in a timely manner with limited select divestitures.”
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.