Scripps adopts poison pill following Sinclair takeover bid

E.W. Scripps has adopted a shareholder rights plan in response to a takeover bid from Sinclair worth over $500 million, the company announced Wednesday.

The plan, commonly known as a poison pill, is intended to give the Scripps board time to evaluate Sinclair’s proposal and consider other strategic options. The move would dilute the holdings of any investor that acquires more than 10 percent of the company without board approval.

The shareholder rights plan becomes effective immediately and expires in one year. It allows current shareholders to purchase additional shares at a 50 percent discount if any investor crosses the 10 percent threshold. Sinclair currently owns 9.9 percent of Scripps, according to recent filings.

“The rights plan safeguards shareholders’ ability to receive appropriate value for their investment and ensures that the board can assess the recently received proposal, and any strategic alternatives, in a thoughtful and orderly manner,” said Scripps board chair Kim Williams in a statement.

Sinclair disclosed its stake in Scripps earlier this month and submitted a takeover offer on Nov. 6. Under the proposal, shareholders would receive $7 per share—$2.72 in cash and $4.28 in stock of the combined company. The offer represents a 200 percent premium to Scripps’ 30-day volume-weighted average price as of Nov. 6.

Sinclair makes unsolicited offer to acquire E.W. Scripps

Sinclair estimated the deal would generate $325 million in synergies and said it would fund the cash portion of the offer from existing liquidity. Shareholders would have the option to choose between cash and stock, subject to proration. If approved, Scripps shareholders would own about 12.7 percent of the combined entity.

A Sinclair spokesperson described the proposed merger’s rationale as “indisputable.”

“Given the family control of Scripps, the only effect of adopting a poison pill is to limit liquidity opportunities for public shareholders of Scripps,” the spokesperson said. “We look forward to continuing to engage with Scripps so we can reach a definitive agreement and deliver significant benefits to shareholders and local communities.”

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Scripps’ voting shares are largely controlled by the descendants of company founder Edward Scripps, who hold approximately 93 percent of the vote, according to the company’s annual report.

Under the terms of the rights plan, Scripps will issue one right per share to holders of Class A common stock and voting shares as of Dec. 8. The rights are exercisable only if an entity acquires more than 10 percent of Class A common shares.

In the event of a merger following an unauthorized acquisition, the plan also allows rights holders to purchase the acquiring company’s stock at a 50 percent discount.

The proposal would bring the combined company’s station count to more than 240, potentially raising regulatory concerns. The Federal Communications Commission currently limits national station ownership to 39 percent of U.S. households.