ION Accepts Tender Offer from NBC U, Citadel

IONMedia Networks accepted a tender offer from NBC Universal and Citadel Investment Group, which will invest $100 million in the broadcaster’s growth and digital plans.

The deal, which will result in a comprehensive restructuring of ION, was opposed by a group of disgruntled shareholders, who claimed that there were better offers made for ION, including one for $2.1 billion from EchoStar Communications, theNew York Postreported.

David Friedman, the lawyer for Gradient Investors, one of the unhappy shareholders, couldn’t be reached for comment Friday.

ION -- which owns 60 TV stations and has a national network -- is expected to become privately held following the NBC U-Citadel transaction.

ION, formerly called Paxson Communications, was founded by Lowell “Bud” Paxson. He got out of the business in November 2005, and NBC U, under federal regulations had to transfer control of his stake to a strategic partner.

NBC U is transferring its call right on Paxson’s controlling shares to Citadel. According to the terms of the agreement, Citadel will exercise the call right, commence a cash tender offer for ION’s outstanding class-A common stock at a price of $1.46 per share and invest $100 million to fund the company’s future growth and digital investment plans.

In addition, ION will launch an exchange offer and consent solicitation to holders of its other preferred stock for newly issued subordinated debt and preferred stock.

NBC U will continue to hold nonvoting securities, a minority interest, after the restructuring is complete. In its agreement with Citadel, NBC U acquired certain options with an initial term of five years to acquire voting control of ION.

ION’s board approved the NBC U-Citadel transaction on the recommendation of a special committee of independent directors. It is subject to various regulatory approvals.