Scripps adopts poison pill to avoid Sinclair takeover
Scripps adopts poison pill to avoid Sinclair takeover
The Sinclair Broadcast Group would love to get its hands on Scripps, but it appears the feeling is far from mutual.
Sinclair Broadcast Group may find itself spurned at the altar. The company has made no secret of its interest in purchasing E.W. Scripps, having already purchased an 8.2% stake in the station-owning company. Sinclair reportedly wants the rest of Scripps as well, but Scripps isn’t as eager to be acquired, and has adopted a provision that could kill any such move in its crib.
Key Details:
- Hands off: Scripps has approved a poison pill to stop Sinclair from acquiring it through a hostile takeover.
- Diluted value: In essence, the provision would dilute the position of Sinclair.
- Sports giant?: A combination with Scripps would bring a large amount of sports rights under Sinclair’s control.
Per reporting from Front Office Sports, Scripps has approved a limited-duration shareholder rights plan that will last for the next year. Current investors will get a share right for every share of Scripps they own as of Dec. 8, which will trigger the poison pill provision if/when any company acquires more than 10% of Scripps.
Sinclair already owns 9.9% of Scripps, so the share rights will activate if it acquires any more of the company. At that point, all other holders would be allowed to buy new Scripps shares at a discount of 50%, which Sinclair would not be able to purchase. That could dilute Sinclair’s ownership percentage markedly, and make a hostile takeover incredibly expensive or outright impossible.
“The rights plan is intended to protect shareholders from coercive tactics and to provide the board with time to thoroughly evaluate the [Sinclair] offer and any other potential strategic alternatives,” Scripps said in a statement after the shareholder rights plan gained approval.
Sinclair wasn’t happy about the move by Scripps to adopt this provision, and made its feelings clear in a statement of its own.
“We believe the strategic and financial rationale of a potential Sinclair-Scripps combination is indisputable,” Sinclair said. “Given the family control of Scripps, the only effect of adopting a poison pill is to limit liquidity opportunities for public shareholders of Scripps.”
Purchasing Scripps would bring Sinclair’s inventory of local TV stations around the country to over 230, and would also bring over a large selection of sports rights. The deal would still be subject to government oversight, as federal law prohibits any station owner from controlling enough stations to reach more than 39% of American households.
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