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And Now Cumulus Confirms The Big Deal

February 18, 2011

In a release this morning, Cumulus also confirmed that a deal is in the works to purchase Citadel Communication for $37.00 per share.

Here's the full Cumulus Release

Cumulus Media today confirmed that Cumulus and Citadel Broadcasting Corporation (Citadel) have entered into an exclusivity agreement to negotiate a merger agreement under which Cumulus would acquire all of the outstanding common stock and warrants of Citadel at a price of $37.00 per share. Citadel owns and operates 225 radio stations in over 50 markets and also operates the Citadel Media business, which is among the largest radio networks in the US.

Under the terms of Cumulus proposal, the payment received by Citadel shareholders would consist of a combination of cash and Cumulus stock for each Citadel share and warrant, with a fixed exchange ratio. Based upon the proposed cash and stock election formula, the $37.00 per share consideration would, on average, be capped at a maximum of $30.00 per share in cash and a maximum of $14.00 per share in Cumulus stock. Based on actual elections made by Citadel shareholders and subject to proration, each Citadel shareholder could individually receive more or less cash or Cumulus stock than these amounts, up to the $37.00 per share total.

Cumulus expects to fund the cash portion of the purchase price with up to $500 million in equity financing from Crestview Partners and Macquarie Capital, and the remainder through debt financing to be led by UBS Investment Bank and Macquarie Capital. Cumulus, which previously announced the pending acquisition of the remaining equity interests that it does not currently own in Cumulus Media Partners LLC (CMP), also expects to complete a refinancing of all of the outstanding debt of Cumulus, CMP and Citadel as part of the proposed transaction.

Cumulus anticipates that the transaction, after giving effect to anticipated synergies, will be accretive relative to Cumulus current Adjusted EBITDA trading multiple.

After giving effect to the proposed acquisition, Cumulus would own 570 radio stations across approximately 120 US markets.

A combination of Cumulus and Citadel, together with CMP, would provide Cumulus with:

A truly national platform with approximately 120 US markets, including 8 of the top 10 markets;
A balance sheet with lower overall leverage and a simplified capital structure;
A significantly enhanced equity market capitalization for Cumulus, which would provide greater trading liquidity and strategic flexibility;
The scale necessary to effectively compete and invest in the local digital media marketplace; and
A network for the syndication of content and technology assets.
Execution of a definitive merger agreement with Citadel is subject, among other things, to completion of due diligence and financing arrangements. There can be no assurance the parties will reach a definitive agreement or, if an agreement is reached, that a transaction will be completed or on what terms. Any transaction would be subject to the approval of each companys board of directors, as well as obtaining regulatory and shareholder approvals, and other customary conditions.

UBS Investment Bank and Macquarie Capital are acting as financial advisors, and Jones Day is acting as legal counsel, to Cumulus in the transaction. JPMorgan Securities LLC and Lazard are acting as financial advisors, and Weil Gotshal & Manges LLP is acting as legal advisor, to Citadel.


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