Shares of E.W. Scripps Co. (NAS:SSP) rocketed 43% toward an 8-month high in premarket trading Thursday, after the TV station owner confirmed a deal to buy the broadcast network ION Media for $2.65 billion, in a deal backed by Warren Buffett. As part of the deal, Buffett's Berkshire Hathaway Inc. (NYS:BRK.B) will make a $600 million equity investment in Scripps to help fund the deal. Based on Scripps' stock closing price of $10.47 on Wednesday, the investment represents about 57.3 million shares, or roughly 70% of the shares outstanding. Berkshire was the Scripps' second largest shareholder before the deal, with 5.7% of the shares outstanding, according to FactSet. Berkshire will also receive a warrant to buy an additional 23.1 million shares at $13. The Wall Street Journal had reported earlier that the deal was near. Scripps expects the deal will yield $500 million in synergies and be "highly accretive" to earnings. "For more than 70 years, Scripps has been dedicated to local broadcasting and the markets we serve with an unparalleled commitment to quality objective journalism, community service and stewardship of the public's airwaves," said Scripps Chief Executive Adam Symson. "Now, with this national broadcasting acquisition, Scripps will be the largest holder of broadcast spectrum, poised to take an even greater leadership role in the development of future business models that leverage ATSC 3.0 and spectrum to benefit the American people." Scripps stock had dropped 33.4% year to date through Wednesday, while the S&P 500 (S&P:SPX) had edged up 0.2%.
Sept. 24, 2020, 7:49 a.m. EDT