There’s been some speculation as to what would happen to the CBS/Entercom deal if Entercom’s stock continued to slide. After meeting with Entercom CEO David Field and CFO Rich Schmaeling, Wells Fargo analyst Marci Ryvicker told investors not to worry, there is no “out” in this deal. “This has been somewhat miscommunicated to the Street for whatever the reason, so we will clarify it here. CBS Radio and ETM are contractually obligated to get this deal done – regardless as to ETM’s stock price. We stress that both parties are fully committed but we thought it relevant to highlight the contractual obligation as well.”
Ryvicker said CBS is protected by the “upper limit.” “Simply put, the upper limit caps the number of radio shares exchanged for CBS shares in the case ETM’s share price drops unexpectedly.”
Ryvicker said investor meetings with Field and Schmaeling were packed and she was very encouraged by that. She says that shows a lot of investors are interested. “Our attendees comprised a mix of CBS shareholders looking to learn more about the radio industry and pro forma company as well as small and mid-cap investors who’ve gained organic interest given the current valuation and potential upside. While our discussions spanned a number of topics, the most prominent were on the opportunities (a lot) and risks (a few) posed by the CBS Radio deal, in addition to the PF co.’s long term revenue and EBITDA growth potential. Interestingly, the current ad environment was pretty much an afterthought.”
Ryvicker says the bottom line is that investors are clearly doing work on this and there seems to be increasing interest on the long side. She reiterated her outperform rating and called her $13 price target conservative.
The deal to merge CBS Radio into Entercom is still on track to close later this year.
Have my previous comments been censored? Who is the fascist in charge who authorized this?
Nevermind My mistake.