4pm UPDATE: Citadel Broadcasting is in talks to sell itself to a smaller rival, Cumulus Media for $37 a share in cash and stock, people briefed on the matter told Michael J. De La Merced and Brooks Barnes at DealBook on Thursday, after months of refusing to consider a deal.
Under the terms of the new proposal, Cumulus would pay $30 a share in cash and $7 in stock for each Citadel share, or about $2.5 billion.
Talks between the two companies, which began this week, are ongoing and may still fall apart, one of these people said. One concern of Citadel’s management is that a deal would require a significant amount of debt.
Class B shares of Citadel, which trade over the counter, rose 6.6 percent to $32.50 in midday trading on Thursday after CNBC reported Cumulus’s new offer.
Citadel, the nation’s third-largest radio broadcaster, had previously declined to consider takeover offers by Cumulus last year. The most recent offer, which Cumulus disclosed in December, was valued at $31 a share, or $2.1 billion.
Cumulus has the backing of an investor group led by Crestview Partners, a private equity firm, which previously indicated it would provide up to $500 million in equity.
But the refusal by Citadel to consider the Cumulus offers angered its shareholders, many of whom are hedge funds who gained their holdings in the company after it emerged from bankruptcy in 2009.
Investors were provoked in particular by a $400 million debt offering that Citadel announced shortly after Cumulus’s offer was made public. The bond sale was seen as a deterrent to a takeover because it required a $31 million payment in case the company was sold.
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