With its stock price now in the low single digits, thanks to the coronavirus crisis that has drastically reduced ad spending across the country, the Cumulus Board of Directors has adopted a “shareholder rights plan” to prevent a “creeping change of control” in the company.
Back in 2017 Cumulus adopted a similar plan when its stock price was around the $1 mark. The plan adopted this week expires on April 30, 2021.
This tactic is often used by public companies to try to prevent someone from coming in and buying a large chunk of a company “without an appropriate premium and on terms that would not deliver sufficient value for all shareholders.”
The Cumulus filing states that the plan is “designed to protect shareholder interests and maximize value for all shareholders.” The low stock price is being blamed on the COVID-19 crisis and the Cumulus board believes its does not reflect the true value of the company.
Like many businesses, big or small, radio companies have been feeling the pain of local businesses being forced to shut down by the government due to the coronavirus crisis. With radio built on the ad-revenue model the damage has been severe, with April being one of the worst months in the history of the radio. An uptick in revenue in May and June, states beginning to open up across the country and an election later this year have given radio executives hope that things will be getting better soon.