Media General has agreed to buy Meredith in a cash and stock deal valued at about $2.4 billion to create the one of the largest owners of U.S. TV affiliates.
Meredith shareholders will receive cash and stock amounting to $51.53 per share, 12% higher than the company's closing price on Sept. 4, the media companies said in a joint statement Tuesday. Including Meredith's $722 million in debt, the deal is valued at about $3.1 billion.
The new company, led by Meredith's Chief Executive Officer Steve Lacy, will be called Meredith Media General. It will reach about 30% of U.S. homes with a TV, and will be the third-largest owner of network affiliates, the companies said.
While both Media General and Meredith specialize in operating local partners of larger networks -- including 21st Century Fox, CBS, Comcast's NBC and the Walt Disney's ABC -- the addition of Meredith will give the combined company better access to digital marketing and websites to compliment those stations. Meredith publishes magazines including Better Homes and Gardens, Family Circle and Shape.
Meredith itself was once in the hunt to buy Time Inc., the publisher of magazines from Sports Illustrated to People, but those talks fell apart. It's not clear whether Meredith Media General will have as much appetite to increase its holdings in publishing as Meredith did alone, or whether TV affiliates will represent the primary business at the newly formed company.
Mr. Lacy also said last year that the company was "not opposed" to separating its TV and publishing operations into separate companies, as many others have done in recent years.
Media General shareholders will get a share of the new company for every one they owned in the old business. After the deal, Meredith shareholders will own 35% of the new company and Media General's investors will hold 65%.
The deal is expected to close by June 30, 2016, following approval from shareholders and regulators. RBC Capital Markets served as financial advisers to Media General, and BDT & Co. and Moelis & Co. advised Meredith.
-- Bloomberg News with Ad Age staff