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NEW YORK — Shares of Hearst-Argyle Television Inc. jumped 23.3% after controlling shareholder and media firm Hearst Corp. said it will take the TV station group private for about $600 million in cash in the latest buyout deal in the media and entertainment industry.
The privately held owner of newspaper, magazine and TV assets cited the changing media landscape as a key reason behind the move.
The stock was by far Friday’s biggest gainer on The Hollywood Reporter Showbiz 50 stock index. Hearst-Argyle shares closed at $25.22, giving the company a $2.4 billion market capitalization, according to Yahoo Finance. The stock has traded between $18.70 and $28.16 during the past year.
Hearst Corp. said it intends to make a tender offer for all of the outstanding shares of Hearst-Argyle Series A common stock that it doesn’t already own for $23.50 each in cash. The price tag represents a premium of about 15% over the Thursday closing price of the stock.
Hearst Corp. already owns about 52% of the company’s Series A stock and 100% of its Series B shares. That puts Hearst’s voting stake in the firm at about 73%.
“The competitive demands of the TV broadcasting industry and changes in the broader media industry, when balanced against the pressures on a public company to deliver short-term results, have convinced us that private ownership of Hearst-Argyle is desirable and will assist Hearst-Argyle in attaining its strategic and business objectives,” Hearst Corp. president and CEO Victor Ganzi said in a letter to the Hearst-Argyle board.
Ganzi said that the Hearst-Argyle stock was a good acquisition currency, which helped the firm acquire the Pulitzer stations in 1999, but said “the environment has changed since that time.”
Following the transaction, Hearst-Argyle will become a wholly owned unit of Hearst Corp., which expects to launch the tender offer early next month.
Hearst Corp. also owns 12 daily and 31 weekly newspapers, including the Houston Chronicle and San Francisco Chronicle; nearly 200 magazines, such as Cosmopolitan and O, the Oprah Magazine; as well as stakes in cable networks Lifetime, A&E, the History Channel and ESPN.
Hearst-Argyle owns 29 TV stations, which reach a combined 18% of U.S. viewers.
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