TV-station empire Tegna has hit a roadblock in negotiations with suitors who are looking to buy the company in a deal worth $8.4 billion, sources close to the situation said.
Hedge fund Standard General and Apollo Global Management on Nov. 22 raised their fully financed offer for Tegna from $22 to $22.65 a share, valuing the company at roughly $5 billion and also agreeing to assume the company’s $3.4 billion in debt, sources close to the situation said.
Tegna shares on Friday were recently off 0.3 percent at $19.80 in early afternoon trades.
The raised bid came after Tegna had failed to accept or reject the initial offer which was made two months earlier, according to the sources.
A collapse in talks would represent the third time in as many years that Tegna — spun off from newspaper giant Gannett in 2015 as a separate, publicly traded company — has weighed a possible sale only to have it scrapped in the end. The Virginia-based company operates 64 television and two radio stations across 54 US markets.
In recent weeks, insiders say Tegna has asked the bidders to agree to a “hell or high water” condition, meaning they would not walk away from the merger no matter how long it took to get through regulators. Tegna also has demanded a higher-than-normal breakup fee of about $500 million, sources said.
Standard General and Apollo are comfortable with the first condition but have countered with a breakup fee about half as big, sources said.
Sources said Tegna has voiced concerns whether the Standard General and Apollo bid can withstand antitrust scrutiny from the Federal Communications Commission. The FCC’s national media ownership rule prohibits any entity from owning commercial television stations that reach more than 39 percent of US television households nationwide.
Tegna’s stations combined with those that Apollo and Standard General already own would surpass that mark. Apollo plans though to keep its current stations and Tegna separate, sources said.
There are no other suitors with firm offers for Tegna, insiders said. That includes Byron Allen, the comedian-turned-media-mogul who owns the Weather Channel — who for almost a year has been trying to put together a Tegna bid. While Allen repeatedly said he has the money, he hasn’t yet proven it, according to sources.
Allen declined to comment.
Tegna, meanwhile, has signaled it believes it is worth over $25 a share and negotiations have stalled.
By year-end, a deal will likely come together or Tegna will announce it is remaining public, sources close to the situation said. The company’s shares which are hovering Friday around $20 a share would likely fall to about $18 without a deal, a hedge fund manager following the situation said.
This situation is taking on a familiar pattern.
In 2019, Tegna confirmed it rejected a takeover offer from Apollo. In early 2020, Tegna started a sales process getting bids from Gray Television and Apollo at reportedly $20 a share. Tegna canceled that process when the COVID pandemic started and debt markets became choppy.
Tegna in this sales process got Soo Kim’s Standard General — which launched an unsuccessful proxy contest against it this spring —to sign an agreement it would not engage in another proxy contest for more than a year, sources said.
Kim had highlighted during the heated proxy fight that the company had been hit with racial discrimination and sexual harassment suits. Some insiders now suspect that Tegna may have been more interested in getting that concession than in selling itself, sources said.
Standard General has made it clear if it bought Tegna it would replace CEO David Lougee.
Tegna declined to comment.