(Reuters) - U.S. regional TV station operator Gray Television Inc (GTN.N) has made an offer to acquire larger peer Tegna Inc (TGNA.N) for approximately $8.5 billion, including debt, people familiar with the matter said on Friday.
A successful bid by Atlanta-based Gray would significantly expand its footprint in several TV markets. It underscores the pressure Gray and other companies in the TV station industry are under to gain scale and pricing power with advertisers and the major networks.
While the sector is benefiting from increased political advertising this year ahead of the U.S. presidential election in November, TV advertising budgets have been in decline as media consumption shifts to the internet and online streaming.
Gray, which has a market capitalization of $1.5 billion, has offered about $20 per share in cash and stock for Tegna, two of the sources said. The acquisition financing would add to Gray’s $3.8 billion debt pile, but the company has a plan to quickly pay down debt should the deal be completed, one of the sources added.
After Reuters reported on Gray’s bid on Friday, private equity firm Apollo Global Management Inc (APO.N) informed Tegna it was also prepared to offer $20 per share to buy the company, but its bid would be all-cash, the sources said.
