Shares of media entertainment company Tribune Media Company (NYSE: TRCO) popped on Monday, rising 9.9% as of 9:47 a.m. EST. The stock's gain comes amid news that television broadcasting company Nexstar Media Group (NASDAQ:NXST) has entered into an agreement with Tribune to acquire the company.
The definitive merger agreement states that Nexstar will acquire Tribune Media for $46.50 of cash per share, valuing the deal at $6.4 billion when including Tribune's outstanding debt. Explaining the stock's jump on Monday, this per-share price represents a 15.5% premium compared to where Tribune stock was trading by market close on Nov. 30.
This merger agreement follows Sinclair Broadcast Group's (NASDAQ:SBGI) failed attempt to acquire Tribune Media earlier this year. The deal's detour began when Federal Communications Commission Chairman Ajit Pai expressed concerns about the acquisition. In August, Tribune terminated its merger agreement with Sinclair and filed a lawsuit against the company for breach of contract.
In a press release about Nexstar's agreement to acquire Tribune, the companies noted the deal will be "immediately accretive to Nexstar's operating results inclusive of expected operating synergies of approximately $160 million in the first year following the completion of the transaction and planned divestitures."
"We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today's rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate," said Nexstar CEO Perry Sook in the press release.
The deal is expected to close by late in the third quarter of 2019.