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Cumulus Media Rejects $1.2B Acquisition Bid by Jeff Warshaw-Led Consortium

President/CEO Mary Berner said the bid "significantly undervalues the company," which will instead offer shareholders a $50 million stock repurchase program.

Cumulus Media has rejected an unsolicited $1.2 billion bid to buy the company and instead is offering shareholders a $50 million stock repurchase program, according to a letter to shareholders the company filed with the U.S. Securities Exchange Commission in conjunction with its first-quarter financial results.

In that letter from Cumulus Media president/CEO Mary Berner, the company said that its board of directors, along with financial and legal advisors, have concluded that the $15-$17 a share bid “significantly undervalues the company and is not in the best interest of it shareholders.”


While the letter doesn’t reveal the identity of the bidder, Reuters, which initially broke the news about the bid on April 14, identified the suitor as a consortium of investors led by veteran radio industry executive Jeff Warshaw.

In the letter, Berner continued, “The Company is well-positioned to deliver meaningful additional upside value to our shareholders, and we note that our confidence in the Company’s growth prospects is also evident among equity research analysts who collectively maintain an average price target of $26.50/share.”

Cumulus Media closed at $14.24 a share, up $1.09 from the previous day’s close of $13.15, which gives it a market capitalization of $294.35 million, according to Yahoo Finance. The $900 million in debt the company carried through a revolving credit facility with a term loan component and notes at the end of 2020 has been paid down by $122 million to the current debt level of $787 million. Moreover, the company noted that since 2018, it has experienced a net debt reduction of $650 million.

“In addition to driving a rapid deleveraging of our balance sheet, we expect our continued cash flow generation to support a meaningful return of capital to shareholders now and in the future,” which is why it is offering a share buyback, the letter stated.

For the quarter ended March 31, Cumulus reported a net loss of $905,000, or 4 cents per diluted share, on revenues of $232 million. That’s an improvement over the $21.92 million loss, or $1.07 per diluted share, the company had in the prior year when it generated $201.73 million in revenue.

So losses are greatly reduced, while revenue grew 15% in the first quarter over last year. Furthermore, while the company is still in the red, Berner noted in her letter to shareholders that the company generated $31.2 million in earnings before interest, taxes, depreciation and amortization; and is reaffirming its guidance of a 2022 EBITDA target of $175 million to $200 million, which would mark a big increase over $135 million in EBITDA for 2021 and more than double the $82 million EBIDTA the company generated in 2020.

While the Warshaw bid didn’t shake loose any other potential suitors for Cumulus Media, it remains to be seen if the board’s rejection of that bid is the end — or whether the consortium will up its offer.

Nevertheless, the shareholders letter concluded that “the Company’s Board is open to all paths that continue to drive superior shareholder value. Our strong momentum across business lines, multiple digital revenue growth drivers, operational efficiency and superior cash flow provide the Company with substantial untapped upside that it expects to continue to realize on behalf of its shareholders. Given these facts and circumstances, the Board unanimously believes execution of the Company’s strategy will deliver significantly more value to shareholders than this indication of interest. We look forward to updating you on our progress as we continue to deliver value for Cumulus shareholders.”