On Friday, Hearst Corp. said it plans to make an offer of $23.50 a share to buy the remaining portion of the Hearst-Argyle station group it doesn't own and take it private in a $600 million transaction. The proposed per-share price marked a 15% increase over the previous day's closing price, but after the offer became public, the share price soared some 23%, and it continued to edge up Monday to close at $25.36.
The committee considering the Hearst Corp. bid will include two H-A directors, two of which had been directors of Argyle Television--which merged with Hearst Television to form the company, which now operates 30 stations, a decade ago.
On Monday, JP Morgan analyst John Blackledge issued a report where he argued the $23.50 offer price "may be too low" based on recent sales of station groups to private equity operations. "The tender offer could be increased at some point soon to entice current shareholders to sell their stake," he wrote, suggesting it could be increased up to 20% above the initial offer, which would be $28.20--far above where the stock is currently trading.
H-A said that if Hearst Corp. indeed makes its planned offer early next month, then H-A will advise shareholders which way to go within 10 days.
Hearst Corp. controls 73% of the shares of H-A and is looking to buy the approximately 25 million shares it doesn't own, JP Morgan said.