Cumulus Strikes Deal for Citadel

Cumulus Media agreed on Thursday to buy the Citadel Broadcasting Corporation in a cash-and-stock deal that values Citadel at about $2.5 billion, including debt, according to Dealbook at nytimes.com.

 The agreement ends months of stalking by Cumulus, which had made several bids for its larger rival that were rejected. In February, however, the two radio station operators began negotiating after Cumulus raised its offer to $37 a share.

“We believe this transaction appropriately reflects the value of the company’s assets and is in the best interests of Citadel stockholders,” Farid Suleman, Citadel’s chief executive, said in a statement.

Together, the two companies would own 572 stations across the country, representing eight of the top 10 markets. Cumulus said it expected to achieve cost savings of $1.50 to $2 a share by combining the two companies.

“We’ll have the national scope and financial strength necessary to make critical investments in content and technology necessary to compete in today’s rapidly evolving media landscape,” Lew Dickey, chairman and chief executive of Cumulus, said in a statement. “I look forward to working together with our 4,000 new team members to build Cumulus into a dynamic and nationwide local media company.”

Under the terms of the deal, Citadel shareholders can choose to receive up to $30 a share in cash, with the rest paid out in stock. Depending on how much stock Citadel’s shareholders opt to take, they could end up owning between 30 percent and 51 percent of the combined company.

Cumulus plans to refinance the debt of the two companies, drawing on as much as $500 million in investments from Crestview Partners and Macquarie Capital and about $3 billion in debt financing.

The deal is expected to close by the end of the year, pending approval by regulators and Citadel shareholders.

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