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Hedge Fund and Religious Broadcaster Team Up to Make Offer for Tegna

Hedge Fund and Religious Broadcaster Team Up to Make Offer for Tegna

(Bloomberg) -- The contest to acquire Tegna Inc. is heating up again.

Najafi Cos., a private equity firm, is teaming up with Trinity Broadcasting Network, which calls itself the world’s largest faith-based broadcaster, to make a bid for the TV-station owner. They’re offering about $20 a share in cash for Tegna, according to a statement from the suitors on Tuesday.

The surprise announcement sent shares of Tegna up 19% to $18 in late trading on Tuesday. They had been battered by the broader rout in recent days, pushing the stock far below a potential deal price.

The new would-be acquirers are vying with Apollo Global Management Inc. and TV producer Byron Allen, who have made their own bids of similar amounts, valuing Tegna at about $8.5 billion, including debt. Gray Television Inc., meanwhile, has dropped out of the bidding, people familiar with the matter said earlier on Tuesday.

Najafi and Trinity are creating a new entity for the proposed takeover and said they would turn Tegna into a private company “free from the pressures of managing short-term public shareholder objectives.”

Gray pulled out after the coronavirus outbreak roiled markets, Bloomberg reported earlier. The due-diligence process has been continuing with Apollo and Allen, a comedian-turned-entrepreneur who wants to use Tegna to help build a media empire.

Hedge Fund and Religious Broadcaster Team Up to Make Offer for Tegna

Apollo, a private equity giant, would likely have an edge in getting financing, especially in a market ravaged by Covid-19 fears. But Allen is pitching a plan to merge his existing businesses, which include 15 local TV stations and the Weather Channel cable network, into an entity called Allen Media.

Until now, Allen’s deals have been smaller, including a $290 million acquisition of 11 stations from USA Television. He took part in Sinclair Broadcast Group Inc.’s $9.6 billion acquisition of the Fox regional sports networks from Walt Disney Co. last year, but as a minority investor.

Tegna, the former TV-station arm of Gannett Co., was spun off in 2015 and retained the old Gannett’s trading history. It has about 60 TV stations in 51 U.S. markets, reaching about 38% of U.S. households. Gray has a similar business, operating local stations in 91 markets -- mainly in the South, Midwest and Southwest.

Gray’s decision to drop its pursuit of Tegna was reported earlier by Reuters.

Trinity said it reaches 175 countries around the world with inspirational programming 24 hours a day. Najafi, based in Phoenix, is a backer of the Phoenix Suns NBA team.

Tegna has also been the target of activist investors. In February, it rejected all four director nominees put forward by Standard General LP, its third-largest holder with about a 9.7% stake. Standard General nominated the potential members in January after its calls for board representation and a strategic review hit an impasse.

The investment firm said this month that it was ready to help Tegna evaluate takeover offers.

“We believe that the Tegna board, with the assistance of independent advisers, needs to run a full and fair process to explore all alternatives to maximize value for all shareholders,” Standard General said in a statement. Donerail Group emerged in January as another activist holder in Tegna, pushing it to explore a sale.

©2020 Bloomberg L.P.