Citadel in Negotiations to Sell Itself to Cumulus

Citadel Broadcasting is in exclusive negotiations with Cumulus Media to be acquired by Cumulus in a deal worth $37 a share in cash and stock, according to people close to the situation.

The majority of the consideration, some $30 a share, would be in cash and the remainder in Cumulus stock.

Last November, Cumulus made a $31 a share bid for Citadel, which was rejected by the company in December. Since then, Citadel has been pursuing a potential sale and wound up with Cumulus and Entercom Communications bidding against each other.

The deal would be highly leveraged, requiring the $200 million market cap Cumulus to finance a cash payment in excess of $1 billion.

Sources tell me that private equity firm Crestview may contribute as much as $500 million towards the cash portion, in partnership with Cumulus.

The question for Cumulus is whether it can secure the remainder of the financing it needs. That task may fall to its banking advisor, UBS. At present, shareholders seem to like the deal. They have sent shares of Cumulus up sharply after I first broke the news.

Citadel, which emerged from bankruptcy in June of last year, runs 224 radio stations. Officials at Cumulus and Citadel did not return calls for comment.

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