Broadcaster Tenga broke its silence about a swirl of suitors, acknowedging it received four unsolicited offers but saying it’s not currently in talks after two bidders withdrew and the process is stalled with the other two.
Tegna did not name the interested parties. But smaller Gray Television made a cash-and-stock offer offer that it withdrew. The other three offers came from private Equity firm Apllo, Bryon Allen’s Allen Media Group and The Najafi Companies and Trinity Broadcasting Network in a joint bid. All three were said to be $20 a share in cash, or $8.5 billion.
Tegna said that of the four, it engaged “substantially with two and proided them with extensive non-public due dilligence information. Both made their proposals shortly before the recent market dislocation due to the COVID-19 pandemic and both subsequently informed Tegna that they were ceasing discussions.” It said the other two parties have not signed confidentiality agreements to enable due diligence – an in-depth look a company’s finances and operations – and have not delivered any information on financing sources.
“The Tegna’s Board and management have meaningfully engaged with third parties to explore opportunities to create value,” said Tegna’s chairman Howard Elias in a statement Sunday. “The Board has been, and remains, willing to consider transactions that create compelling value, and our focus now is on helping management navigate through an unprecedented environment.”
Added Dave Lougee, president and CEO, said, “Like every other company, TEGNA is operating in uncharted waters due to COVID-19 as we focus on ensuring the health and safety of our employees while continuing to create and preserve value. High-quality local news has never been more important, and we are fortunate to have significant contractual subscription revenues and a strong balance sheet with minimal near-term debt maturities. We are working through the current challenges raised by COVID-19 and are very confident that our long-term growth drivers remain intact.”
The company’s statement came as a major shareholder attempts to install four new directors on the Tegna’s 12-member board. Investment firm Standard General, which holds a 9.7% stake of the company, proposed the alternate slate to shareholders for a vote in a proxy statement it filed with the SEC last week ahead of Tegna’s annual meeting on April 30.
In response to Tegna’s latest statement, Standard General’s founding partner Soohyung Kim
Soohyng Kim said, “We understand that TEGNA’s process has stalled because, amid a global emergency and capital markets dislocation, this Board has created arbitrary deadlines and unnecessary preconditions. By their own admission, the company has been unwilling to provide access to information unless suitors first demonstrate certainty of financing. This approach would be off market in any deal environment, and particularly so under current market conditions. The Board’s actions appear designed to end this process before it can even begin in earnest.”
Standard General has in the past cited “a continuing pattern of passivity by the TEGNA Board in the face of persistent operational and shareholder returns underperformance, a questionable M&A strategy, accompanied by inconsistent disclosures regarding financial metrics and multiples paid, excessive leverage and the rebuff of an acquisition proposal at a premium valuation from a credible buyer.” Standard General said it tried to discuss putting Kim on the board of Tegna but was rebuffed.
Tegna has responded that in meetings with Standard General’s Soohyng Kim, “Mr. Kim demanded a board seat for himself, but offered no concrete ideas to create shareholder value.” It has said, “Tegna’s board thoroughly evaluated Mr. Kim as a potential director and has serious concerns about Mr. Kim’s prior board service. Many who know him well commented on his track record of endorsing and executing corporate actions in favor of his own interests to the detriment of other shareholders, as well as a dismissive attitude toward the perspectives of other directors.” Tegna also said it “is also concerned that Mr. Kim’s significant investments in and influence over other broadcasting companies would create a conflict of interest as a Tegna director.”