Gray Television and Raycom Media agreed to merge in a transaction that will create the single largest owner of local television stations and digital assets in the country.
The merger transforms Gray from a small, regional broadcaster into a media company with nationwide scale based on high-quality stations in attractive markets.
Under the terms of the agreement, Gray will acquire Raycom for $3.647 billion in total proceeds, consisting of $3.547 billion in enterprise value and $100 million of Raycom cash. The consideration will consist of $2.85 billion in cash, $650 million in a new series of preferred stock, and 11.5 million shares of Gray common stock. Gray expects the transaction to be substantially accretive on a free cash flow per share basis.
Upon closing, Raycom President and CEO, Pat LaPlatney, will become Gray’s president and co-CEO. In addition, LaPlatney and Raycom’s former President and CEO, Paul McTear, both of whom are currently members of Raycom’s board of directors, will join Gray’s board. At that time, Hilton Howell will become executive chairman and co-CEO of Gray.
The transaction is subject to customary closing conditions and regulatory approvals. The parties expect to close the transaction in the fourth quarter of 2018.
Wells Fargo has underwritten the debt financing portion of the transaction in the amount of $2.525 billion. Gray’s existing term loan B and senior unsecured notes will remain in place.
“Today we announce the transformation of Gray Television into a true leader in the broadcast television industry,” said Howell. “Combining our company with the excellent Raycom stations and the superb Raycom employees will create a powerhouse local media operation.
Wells Fargo Securities served as financial advisor and Cooley and Jones Day as legal counsel for Gray. Stonebridge Capital served as financial advisor and Robinson Bradshaw and Covington & Burling as legal counsel for Raycom.
Gray owns and/or operates over 100 television stations across 57 television markets that collectively broadcast over 200 program streams including over 100 channels affiliated with the CBS Network, the NBC Network, the ABC Network and the FOX Network.
Raycom Media, an employee-owned company, is one of the nation’s largest privately-owned local media companies and owns and/or provides services for 65 television stations and two radio stations in 44 markets located in 20 states.
