In a letter to shareholders s part of its first quarter earnings report today, Cumulus Media CEO Mary Berner announced the rejection of the acquisition offer made by Jeff Warshaw last month.
Berner stated that the Cumulus Board of Directors unanimously concluded that the indication of interest significantly undervalues the company. Cumulus will begin a $50 million share repurchase program to instead deliver value to shareholders. The earnings report stated that the company increased first quarter revenue by 15% year-over-year with digital revenue up 18% thanks to a 35% increase in digital marketing services and 22@ increase in podcasting revenue.
Regarding the unsolicited offer made by Warshaw on April 14, Berner wrote:
The Company recently received an indication of interest in acquiring the Company for $15.00 to $17.00 per share. After a careful and thorough review, conducted in consultation with our financial and legal advisors, the Board unanimously concluded that the indication of interest significantly undervalues the Company and is not in the best interests of its shareholders.
The Company’s Board is open to all paths that continue to drive superior shareholder value. Our strong momentum across business lines, multiple digital revenue growth drivers, operational efficiency and superior cash flow provide the Company with substantial untapped upside that it expects to continue to realize on behalf of its shareholders. Given these facts and circumstances, the Board unanimously believes execution of the Company’s strategy will deliver significantly more value to shareholders than this indication of interest.
We look forward to updating you on our progress as we continue to deliver value for Cumulus shareholders.
