DEFA14A: TEGNA Addresses Merger Lawsuits, Boosts Proxy Disclosures

TEGNA Inc. filed supplemental disclosures to its definitive proxy statement to address shareholder lawsuits alleging misleading information regarding its merger with Nexstar Media Group.

Summary

• TEGNA Inc. filed supplemental disclosures to its definitive proxy statement concerning its merger with Nexstar Media Group, Inc.
• The disclosures address three lawsuits filed by purported stockholders alleging false or misleading information and/or material omissions in previous proxy statements.
• The lawsuits seek to enjoin the merger, or alternatively, rescission and/or compensatory damages, along with legal fees.
• TEGNA maintains that the claims are without merit and no additional disclosures were legally required.
• The company voluntarily made these supplemental disclosures to avoid potential delays or adverse effects on the merger and to minimize litigation costs.
• Supplemental details include a rejected all-stock proposal from "Party A" which implied $22 to $28 per share for TEGNA stockholders, but was deemed to have substantial execution risks and uncertain value compared to Nexstar's all-cash offer of $22.00 per share.
• Financial advisor Allen & Company's analysis included Adjusted EBITDA multiples for selected public companies (6.25x-7.25x for CY2024/CY2025, 6.5x-7.5x for CY2025/CY2026) and precedent transactions (7.5x-8.5x).
• Discounted Cash Flow analysis used perpetuity growth rates of (2.5)% to (1.5)% and discount rates of 6.5% to 7.5%.
• Wall Street analysts' price targets for TEGNA Common Stock as of August 8, 2025, ranged from $18.00 to $21.00 per share, with a mean of $20.13 and a median of $20.90.

Sentiment

Score: 4

Explanation: The filing addresses ongoing litigation which introduces uncertainty and potential delays to a significant corporate event (merger). While TEGNA denies the claims and is taking steps to mitigate risks, the existence of lawsuits and demand letters is a negative factor. The supplemental disclosures themselves are a neutral-to-positive step in addressing the legal challenges, but the underlying issue remains a concern.

Positives

• TEGNA is proactively making supplemental disclosures to mitigate litigation risks and avoid merger delays, without admitting wrongdoing.
• The Board of Directors concluded that Nexstar's all-cash offer of $22.00 per share provided superior and more certain value compared to an alternative all-stock proposal from "Party A".

Negatives

• Three lawsuits have been filed by purported stockholders alleging false/misleading information or material omissions in proxy statements related to the merger.
• The lawsuits seek to enjoin the merger, or alternatively, rescission, compensatory damages, and legal fees.
• TEGNA has also received demand letters from counsel representing purported stockholders with similar allegations.
• The litigation introduces uncertainty and potential costs, risks, and delays to the merger process.

Risks

• The timing, receipt, and terms of required governmental or regulatory approvals for the merger could be affected, potentially reducing anticipated benefits or causing abandonment.
• Risks related to satisfying closing conditions, including failure to obtain necessary regulatory approvals or TEGNA stockholder approval.
• Announcements related to the proposed transaction could adversely affect TEGNA's common stock market price.
• Disruption from the proposed transaction may make it difficult to maintain business and operational relationships, including retaining key personnel and relationships with customers, vendors, and others.
• The occurrence of any event, change, or other circumstances that could lead to the termination of the merger agreement.
• Disruption of management's attention from ongoing business operations due to the proposed transaction.
• Significant transaction costs associated with the merger.
• Risk of litigation and/or regulatory actions related to the proposed transaction, or unfavorable results from current or future legal proceedings.
• Other business effects, including industry, market, economic, political, or regulatory conditions.
• Information technology system failures, data security breaches, data privacy compliance, network disruptions, and cybersecurity, malware, or ransomware attacks.

Future Outlook

The company's future outlook is primarily tied to the successful consummation of the merger with Nexstar. However, this is subject to various risks including regulatory approvals, satisfaction of closing conditions, potential adverse effects on stock price, business disruption, and the outcome of ongoing and potential future litigation. The company does not undertake any obligation to update or revise forward-looking statements.

Management Comments

• TEGNA believes that the claims asserted in the actions described above are without merit and that no additional disclosures were or are required under applicable law.
• To moot the unmeritorious disclosure claims, to avoid the risk of the actions described above delaying or adversely affecting the Merger and to minimize the costs, risks and uncertainties inherent in litigation, without admitting any liability or wrongdoing, TEGNA has determined to voluntarily make the following supplemental disclosures.
• TEGNA specifically denies all allegations in the actions described above that any additional disclosure was or is required.
• It was the consensus of the Board of Directors that it was not in the best interests of TEGNA or its stockholders to pursue the Party A Proposal rather than the proposed all-cash acquisition of TEGNA by Nexstar for $22.00 per share, because, among other things, the Party A Proposal presented substantial execution risks, and the Board of Directors view that the proposed $22.00 all-cash per share price of the Nexstar proposal provided superior and more certain value to TEGNA Stockholders than Party As proposed all-stock combination.

Industry Context

This filing relates to the ongoing consolidation within the broadcasting industry, exemplified by Nexstar Media Group's acquisition of TEGNA. Such mergers often face scrutiny from regulators and shareholders, leading to litigation over disclosure adequacy. The supplemental disclosures highlight the competitive landscape for acquisitions, with TEGNA's board evaluating an alternative all-stock proposal from 'Party A' before reaffirming the superior value of Nexstar's all-cash offer. The financial metrics provided reflect typical valuation methodologies used in media M&A, considering Adjusted EBITDA multiples and discounted cash flow analysis.

Comparison to Industry Standards

• Allen & Company's "Selected Public Companies Analysis" used Adjusted EBITDA multiples of 6.25x to 7.25x (CY2024/CY2025) and 6.5x to 7.5x (CY2025/CY2026), derived from a selection of comparable public companies in the broadcasting sector.
• The "Selected Precedent Transactions Analysis" applied a range of 7.5x to 8.5x to TEGNA's average Adjusted EBITDA, based on multiples observed in selected transactions announced during the past five years, indicating how TEGNA's valuation in the merger compares to recent M&A deals in the industry.
• The Board's rejection of "Party A's" all-stock proposal, which involved a spin-off of non-broadcasting assets and substantial indebtedness, suggests a preference for the certainty and cleaner structure of Nexstar's all-cash offer, aligning with a risk-averse approach often seen in mature industries facing consolidation.
• Wall Street analysts' price targets for TEGNA, ranging from $18.00 to $21.00 per share (mean $20.13, median $20.90) as of August 8, 2025, provide a market-based benchmark against the $22.00 per share offer from Nexstar, suggesting the offer was at a premium to pre-speculation market expectations.

Legal Proceedings

• Faul v. TEGNA Inc., et al., No. 25-cv-12161, filed in the U.S. District Court for the Northern District of Illinois on October 3, 2025.
• Cohen v. TEGNA Inc., et al., Index No. 659416/2025, filed in New York County on October 28, 2025.
• Brady v. TEGNA Inc., et. al., Index No. 659438/2025, filed in New York County on October 29, 2025.
• These complaints generally allege that the Preliminary Proxy Statement or the Definitive Proxy Statement includes false and misleading information and/or fails to disclose allegedly material information in violation of federal or state law.
• The complaints seek to enjoin TEGNA from consummating the Merger, or in the alternative, rescission of the Merger and/or compensatory damages, as well as attorneys and expert fees.
• TEGNA has also received demand letters from counsel representing purported stockholders alleging similar deficiencies and/or omissions.

Stakeholder Impact

• Shareholders: Potential for delays or termination of the merger due to litigation, impacting the certainty of the $22.00 per share cash payout. The lawsuits themselves are brought by purported shareholders.
• Management/Employees: Disruption of management's attention from ongoing business operations due to the proposed transaction and litigation. Potential for difficulty in retaining and hiring key personnel.
• Customers/Vendors: Potential disruption from the proposed transaction making it more difficult to maintain business and operational relationships.

Next Steps

• TEGNA stockholders are urged to read all relevant documents filed or to be filed with the SEC, including the Definitive Proxy Statement and any amendments or supplements.
• The company may receive additional, similar demand letters or complaints, or existing actions may be amended.
• The merger is subject to the satisfaction of various conditions, including governmental or regulatory approvals and TEGNA stockholder approval.

Key Dates

Recommendation

The filing primarily addresses legal challenges to an already announced merger, rather than new operational or financial performance. The existence of shareholder lawsuits seeking to enjoin the merger introduces a degree of uncertainty regarding its timely completion or even its consummation. While TEGNA asserts the claims are without merit and is taking steps to mitigate risks, the litigation itself is a material event. For investors, the core value proposition remains the $22.00 per share cash acquisition by Nexstar. Until the legal challenges are resolved or clarified, the prudent course is to 'hold' for existing shareholders, acknowledging the increased risk of delay or potential disruption to the deal, but without new information to suggest a fundamental change in the company's underlying value or the merger's ultimate likelihood of success.

Keywords

TEGNA, Nexstar Media Group, Merger, Acquisition, Proxy Statement, SEC Filing, Shareholder Lawsuit, Litigation, Supplemental Disclosure, Corporate Governance, Broadcasting Industry, M&A, Financial Analysis, Adjusted EBITDA, Discounted Cash Flow, Stock Price Target