NEW YORK -- Sinclair Broadcast Group and Tribune Media Company, the parent company of FOX31 and Colorado's Own Channel 2, announced Monday they have entered into a definitive agreement under which Sinclair will acquire 100 percent of the issued and outstanding shares of Tribune for $43.50 per share, for an aggregate purchase price of approximately $3.9 billion, plus the assumption of approximately $2.7 billion in net debt.
Under the terms of the agreement, Tribune stockholders will receive $35 in cash and 0.23 shares of Sinclair Class A common stock for each share of Tribune Class A common stock and Class B common stock they own.
The total $43.50 per share consideration represents a premium of approximately 26 percent over Tribune’s unaffected closing share price on Feb. 28, the day before media speculation regarding a possible transaction; approximately 14 percent over Tribune’s 30-day volume weighted average closing stock price; and approximately 8 percent over Tribune’s closing share price on May 5, the last trading day prior to Monday's announcement.
Tribune owns or operates 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.
Tribune’s stations, a list of which is available in Tribune’s most recent Form 10-K filed on March 1 consist of 14 FOX, 12 CW, six CBS, three ABC, two NBC, three MyNetworkTV affiliates and two independent stations.
The group includes stations in the top three DMAs in the country, seven in the top 10 and 34 in the top 50 DMAs.
“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.
“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.”
“This will be the largest acquisition in our company’s history, and I want to thank everyone from the Sinclair team, as well as our advisors and bankers who made this possible,” said David Smith, executive chairman of Sinclair.
“Television broadcasting is even more relevant today, especially when it comes to serving our local communities. Tribune’s stations allow Sinclair to strengthen our commitment to serving local communities and to advance the Next Generation Broadcast Platform.
"This acquisition will be a turning point for Sinclair, allowing us to better serve our viewers and advertisers while creating value for our shareholders.”
“Today’s announcement is the culmination of an extensive strategic review, which has delivered significant value to our stockholders,” said Peter Kern, Tribune’s chief executive officer.
“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 percent 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.”
The transaction has been unanimously approved by the boards of directors of both companies and is anticipated to close and fund in the fourth quarter of 2017.
Completion of the transaction is subject to approval by Tribune’s stockholders, as well as customary closing conditions, including approval by the Federal Communications Commission and antitrust clearance.
In order to comply with FCC ownership requirements and antitrust regulations, Sinclair might sell certain stations in markets where it currently owns stations. Such divestitures will be determined through the regulatory approval process.