Nexstar Media Group Inc. (NXST) agreed to acquire Tribune Media Group Inc. (TRCO) for $4.1 billion. The all-cash deal values Tribune at $46.50 a share, and including debt, amounts to $6.4 billion. The transaction is expected to close in the third quarter of 2019 and bring significant synergies for Nexstar.
If the deal goes through, it would create the biggest television broadcasting company in the US that would own over 200 TV stations. Tribune owns 39 TV stations and operates another three through marketing agreements. The deal will help Nexstar expand into larger markets and reach over 40% of US homes.
This deal comes after a failed attempt by Sinclair Broadcast Group Inc. (SBGI) to acquire Tribune four months ago. The deal faced criticism from regulators and following its termination, both companies filed lawsuits against each other which is still ongoing.
Several large companies in the media and entertainment industry are opting for mergers and acquisitions in order to deal with the increased competition from streaming services like Netflix (NFLX). This deal is expected to benefit Nexstar in terms of scale and growth and to bring significant returns to shareholders.
Nexstar’s shares are up over 8% so far this year while Tribune’s shares are up 4%. As of 12:25 pm ET, Nexstar’s stock was up 2.4% while Tribune’s shares soared 9.8%.