Cumulus Media to Buy Citadel Broadcasting in $2.4 Billion Deal

The merger of two of the nation's top radio companies will create the second-largest operator of traditional radio stations behind Clear Channel.

In a deal worth $2.4 billion, Cumulus Media on Thursday agreed to purchase Citadel Broadcasting, combining two of the nation's top radio companies.

The offer allows Citadel shareholders to receive shares of Cumulus or accept $37 for each share of Citadel they own.

While the deal amounts only to an 8% premium to where Citadel's stock closed a day earlier, it's a 64% premium to where it was five months, after it emerged from a bankruptcy that wiped out earlier shareholders.

Citadel, in fact, had already agreed to exclusive talks with Cumulus three weeks ago after it rejected a bid for $31 a share, so investors had been betting on a sweetened deal.

Cumulus controls 347 radio stations and Citadel 225. To gain support from the FCC and other government regulators, the combined entity might have to sell some stations, but it should still maintain north of 550 stations when all is said and done, making it the second-largest operator of traditional radio stations behind Clear Channel, which has about 800 stations.

Research firm IBISWorld said Thursday that Cumulus and Citadel together will account for 5.1% of the U.S. radio industry's estimated $16.7 billion in revenue this year, less than Clear Channel, Sirius XM Radio and CBS Radio.

The acquisition includes Citadel Media, which creates and distributes radio content such as The Mark Levin Show, Focus on the Family Commentary, Radio Perez, America's Most Wanted, The Donny Osmond Show and several shows from ABC.

Citadel purchased Disney's ABC Radio stations five years ago and took on massive debt to do so, one reason for the company filing for bankruptcy protection in December 2009.

Shares of Cumulus fell 8% on the news Thursday to $4.70.