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Merger and acquisition - Buffett's bid for Media General's newspapers

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General public

About the document

Published date
Language
documents in English
Format
Word
Type
case study
Pages
21 pages
Level
General public
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2 times
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  1. Why does Warren Buffett want to buy MEG's newspaper division?
  2. Is MEG's newspaper division worth 142 million dollars?
  3. How much value, if any, does Buffett derive from the credit agreement?
  4. As a current lender to MEG, would you refinance the 225 million dollars term loan that is coming due? Would you refinance the term loan as a new lender?
  5. What should MEG's CEO Marshall Morton do? What are his options?

The U.S. Newspaper industry has faced, since the late 1980s, significant challenges due to competition of other source of news and information, and saw a progressive and constant decline of daily circulation. Media General Inc., a company that entered the newspaper business in 1850, is no exception to the rule. In 2012, it operated 18 TV stations and published 64 newspapers. Although the shares are publicly traded, the Bryan family still ran the business and held a majority of shares. The company's operational and financial troubles started in 2007. Most of the lines of business saw a decline in revenue, especially newspaper one: revenues fell from 524.8 million dollars to 299.5 million dollars in only five years. The high financial leverage of the firm (with a debt to value ratio of 84%), generates difficulties for MEG to meet his reimbursement obligations.

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