Media General to buy diversified media company Meredith for $2.34 bln

(Reuters) - Media General Inc said it would buy diversified media company Meredith Corp for about $2.34 billion to create the third-largest local TV station owner in the United States.

The deal marks Media General's return to the print business, after it sold most of its newspapers to Warren Buffett's Berkshire Hathaway Inc for $142 million in 2012.

The combined company, to be named Meredith Media General, will initially have 88 TV stations that reach 30 percent of U.S. TV households, the companies said on Tuesday.

Meredith's shares were up 9.68 percent at $50.41 in afternoon trading. They earlier touched a high of $51.30, just shy of the offer of $51.53 per share in cash and stock.

Media General's shares were down 1.6 percent at $10.97.

Meredith has 17 TV stations including affiliates of CBS Corp, Twenty-First Century Fox Inc and Comcast Corp's NBC.

Media General did not immediately respond to a request for comment on its plans for Meredith's magazine business, which includes Martha Stewart Living, Family Circle and Better Homes and Gardens.

Meredith, which is more than 110 years old, also operates websites including Allrecipes.com.

Media General operates and services about 71 TV stations. The companies said they would divest or swap TV stations in six markets to get regulatory approval for the deal.

The acquisition is Media General's second major deal in less than a year. The Richmond, Virginia-based company bought LIN Media for $1.6 billion in December.

Meredith Media General will be an "aggressive industry consolidator", Meredith Chief Executive Stephen Lacy, who will head the combined company, said on a conference call on Tuesday.

Meredith shareholders will receive $34.57 in cash and 1.5214 shares of the new company for each share held, while Media General shareholders will receive one share of the combined company for each share held.

Meredith Media General will have pro-forma annual revenue of $3 billion.

Including debt, the deal is valued at about $3.1 billion.

Media General shareholders will own about 65 percent of the new company after the transaction closes, with Meredith shareholders holding the rest.

The companies said they expect $80 million in synergies within the first two years of the deal closing, expected by the end of June 2016.

RBC Capital Markets, Media General's financial adviser for the deal, and JPMorgan Chase Bank will provide $2.8 billion in financing to the company.

BDT & Co and Moelis & Co were Meredith's financial advisers.

(Reporting by Anya George Tharakan in Bengaluru; Additional reporting by Devika Krishna Kumar; Editing by Kirti Pandey)