Cumulus Adopts “Poison Pill” to Avert Potential Hostile Takeover
Cumulus Media Inc announces that its board of directors has adopted a limited-duration Shareholder Rights Plan (colloquially known as the “poison pill”) to protect the best interests of all Cumulus Media shareholders. The Rights Plan is effective immediately and expires on February 20, 2025, unless the board terminates it earlier. The Rights Plan was adopted in response to the significant accumulation of Cumulus Media stock by Renew Group Private Ltd., an entity based in Singapore that had disclosed that it had acquired approximately 5.15% of Cumulus’ outstanding Class A shares on July 28, 2023. On
January 24, 2024, the Group reported beneficial ownership of approximately 10.01% of the company’s outstanding Class A shares and stated its intent to acquire 20% of Cumulus. The Group has investments in other media companies, including a sizeable holding in a direct competitor of Cumulus Media. According to Investopedia, a poison pill “is a defense strategy used by the directors of a public company to prevent activist investors, competitors, or other would-be acquirers from taking control of the company. Poison pills are executed by buying up large amounts of its stock. They effectively block the accumulation of a company’s outstanding shares. Companies promise to distribute additional free or heavily discounted shares to all existing shareholders, which dilutes the shares so outsiders can’t take over the company by purchasing a controlling amount of shares.” Cumulus board chairman Andrew Hobson says, “Given the facts, the Cumulus board firmly believes it is necessary to adopt a limited-duration rights plan to protect the interests of all Cumulus shareholders. The Rights Plan is intended to enable the company’s shareholders to realize the long-term value of their investment, ensure that all shareholders receive fair and equal treatment in the event of any proposed takeover of the company, and guard against tactics to gain control of the company without paying all shareholders an appropriate premium for that control. Cumulus Media’s leadership maintains open dialogue with its investors, including the Group, and intends to continue that practice.”
Offer will expire at Midnight, New York City time, at the end of the day, on June 9, 2023 (the “Expiration Date”), unless extended or earlier terminated by Cumulus. The “modified Dutch auction” allows shareholders to select the price, within a price range specified by Cumulus, and the number of shares they are willing to sell at that price (or, should a higher price be determined as the “purchase price,” such higher price). The Offer is being made under Cumulus’s previously announced $50 million share repurchase program. The purchase price will be the lowest price per share (in increments of $0.05) of not greater than $3.25 and not less than $2.85 per share, at which shares have been properly tendered and not properly withdrawn, that will enable Cumulus to purchase the maximum number of shares having an aggregate purchase price not exceeding $10 million (or, if the Offer is not fully subscribed, all shares properly tendered and not properly withdrawn). Promptly after the Expiration Date, Cumulus will, on the terms and subject to the conditions described in the offer to purchase, determine the single per-share purchase price that Cumulus will pay, subject to proration and conditional tender provisions, for shares properly tendered at or below the purchase price in the Offer and not properly withdrawn, and accepted for payment, taking into account the number of shares tendered pursuant to the Offer and the prices specified, or deemed specified, by the tendering shareholders.