Radio Giant Cumulus Eyes $2.4 Billion Acquisition of Competitor Citadel

The second- and third-largest U.S. radio firms combined would still have fewer stations than Clear Channel.

NEW YORK - The second- and third-largest U.S. radio station groups could soon combine as Citadel Broadcasting said Thursday that it has agreed to exclusive talks to be acquired by Cumulus Media in a deal that could be valued at more than $2.4 billion.

Cumulus, which controls 347 radio stations in 67 markets, is looking to pay $37 per share - $30 a share of that in cash with the rest in stock - for Citadel, which owns 225 stations, the company said.

The merged entity would have a station count closer to that of top terrestrial radio industry player Clear Channel Communications, which has more than 800 stations, according to its Web site. It comes as radio groups have increasingly battled over advertising dollars with online and other competitors.

Citadel, which last year emerged from Chapter 11 bankruptcy, also owns Citadel Media, which creates and distributes such programs as The Mark Levin Show and The Huckabee Report.

Among Citadel's stations are LA talk station 790 KABC and classic rock-focused 95.5 KLOS, as well as New York talk station 77 WABC and adult hits-focused 95.5 WPLJ. Cumulus has stations in such markets as San Francisco and Westchester County in New York State.

Citadel turned down a takeover offer from Cumulus for $31 per share, or $1.4 billion, late last year.

While acquiring companies typically see a stock hit, shares of both Citadel and Cumulus closed up higher on Thursday after the news emerged. Citadel shares rose 12 percent to $34.16, while Cumulus shares gained 11 percent to close at $4.78.