EW Scripps Stock Sees Volatile Trading Session On Monday – What’s The Sinclair Angle?

• Sinclair had previously acquired a roughly 8.2% stake in E.W. Scripps. 
• The proposed price includes about $2.72 in cash and $4.28 in Sinclair stock, valuing the deal at $325 million.  
• The proposed transaction would spin off Sinclair’s ventures business and corporate assets, then merge its broadcast operations with Scripps.

Sinclair, Inc. (SBGI) announced on Monday that it has submitted a takeover proposal for The E.W. Scripps Co. (SSP) Class A shares, according to its latest Schedule 13D filing with the SEC. 

The company had previously acquired a roughly 8.2% stake in E.W. Scripps. 

Following the announcement, SSP shares witnessed an initial knee-jerk reaction on the upside but soon pared all the gains to trade marginally in the red, at the time of writing.

The Bid Details

On Monday, Sinclair formally presented a plan to buy out all remaining Scripps shares it doesn’t already own, for $7.00 per share. That price includes about $2.72 in cash and $4.28 in Sinclair stock, valuing the deal at $325 million and on a 7× EV/EBITDA (ratio of enterprise value to earnings before interest, taxes, depreciation, and amortization) multiple.  

Sinclair’s stock traded over 1% higher on Monday mid-morning. On Stocktwits, retail sentiment around the stock shifted to ‘neutral’ from ‘bullish’ territory the previous day, while message volume changed to ‘high’ from ‘extremely high’ levels in 24 hours. 

Merger Mechanics

The proposed transaction would spin off Sinclair’s ventures business and corporate assets, then merge its broadcast operations with Scripps. The newly formed entity would maintain a dual-class share structure, and the Scripps family would retain control of the debt and preferred stock board during a transitional phase.

The board of the combined company would have a majority of independent directors, with representation from both the Scripps and Sinclair sides. 

As per the filing, Sinclair now has sole voting control and sole dispositive power over 7.6 million of Scripps’ Class A shares, representing 9.9% of that class as of September 30.

Also See: Why Did INNO Holdings’ Stock Rocket 255% Today?

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