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July 29, 2014

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Lew Dickey Making 'A Strong Bid' For Cumulus
In a mid-day report issued Monday (July 23), Barrington Research analyst Jim Goss says Cumulus investors should jump at the $11.75 per share buyout offer Chairman/CEO Lew Dickey and a group of investors have submitted.

"Investors in Cumulus are being presented with an excellent opportunity to cash out at levels that more accurately reflect the company’s current potential," Goss says. "We feel they should avail themselves of this opportunity. We have been neutral on the stock due to the low probability that the value of the company would be recognized in public trading in the stock." Pointing to his own recent calculated target on the stock of $12 per share, Goss adds, "Mr. Dickey apparently felt the same way and is making what we consider to be a strong bid for the company."

Goss continues, "We have always held Mr. Dickey in high regard for his industry knowledge and management skills. However, the radio ad industry struggles in recent years are well known, and the issues for Cumulus have been further complicated by the small market focus, partly addressed by the Susquehanna transaction and higher than average debt levels."

While he notes that the 45-day window Cumulus has opened up for competing offers may compel some investors to hang onto their stock, Goss doesn't expect a better offer to come in. "We look at Mr. Dickey’s proposal as somewhat of a preemptive strike by making a full value offer at a 40% premium to prior trading levels," he says.

Goss downgraded his opinion on Cumulus stock to Underperform to reflect his view that investors are getting full value on the stock with a sale in the open market at the proposed price.


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