Hemisphere Media Group (HMTV) Stock: Why The Price Surged Over 80%

By Amit Chowdhry ● May 9, 2022
  • The stock price of Hemisphere Media Group Inc (NASDAQ: HMTV) increased by over 80% during intraday trading today. This is why.

The stock price of Hemisphere Media Group Inc (NASDAQ: HMTV) increased by over 80% during intraday trading today. Investors were responding to Hemisphere Media Group, a leading pure-play U.S. media company targeting the high growth U.S. Hispanic and Latin American markets with prominent broadcast, cable television, and digital content platforms, announcing that it has entered into a definitive agreement to be acquired for $7 per share in cash by a subsidiary of Gato Investments LP, a portfolio investment of Searchlight Capital Partners, L.P.

This offer price per share of common stock represents a premium of approximately 86% over Hemisphere’s closing share price on May 6, 2022, the last trading day prior to the announcement, and a premium of approximately 63% over the 30-day volume-weighted average share price for the period ended May 6, 2022. And upon the completion of the transaction, Hemisphere will become a private company wholly owned by Gato.

Along with the entry into the definitive agreement with Gato, Hemisphere entered into a separate agreement to sell Pantaya, the leading Spanish language streaming platform in the U.S., to TelevisaUnivision in exchange for cash plus certain Puerto Rican radio assets including WKAQ AM and KQ105 FM currently owned by TelevisaUnivision. The TelevisaUnivision transaction is subject to customary closing conditions. Hemisphere contemplates using the net cash proceeds from the TelevisaUnivision transaction to promptly prepay Hemisphere’s outstanding senior secured term loans.

A special committee of the Board of Directors of Hemisphere, comprised solely of independent and disinterested directors and advised by its own independent legal and financial advisors, unanimously recommended that the Board approve the transaction and determined it was in the best interests of Hemisphere and its disinterested shareholders. And acting upon the recommendation of the Special Committee, the members of the Board unanimously approved the transaction and recommends that shareholders vote in favor of the transaction.

The merger agreement includes a 30-day “go-shop” period expiring June 7, 2022, during which Hemisphere may actively solicit and consider alternative acquisition proposals. And there can be no assurances that the “go-shop” process will result in a superior proposal, and Hemisphere does not intend to communicate developments regarding the process unless and until Hemisphere determines that additional disclosure is required or desirable.

This merger is expected to close in the third quarter of 2022, subject to the satisfaction of customary closing conditions, including approval by Hemisphere stockholders, receipt of certain regulatory approvals, and the consummation of the TelevisaUnivision transaction.

KEY QUOTES:

“We are pleased to have reached this agreement with Gato, which we believe is the right path forward for our organization and delivers immediate value and certainty to stockholders. We have worked tirelessly to create an extraordinary portfolio of assets, and this transaction is a direct reflection of the quality of our networks, growing audience, and premium news and entertainment outlets. As a private company, and with the support of Gato, we will have the ability to make long-term investments in content and innovation that will best serve Hemisphere’s audiences.”

“Pantaya will flourish under TelevisaUnivision’s ownership. Given the highly competitive video content market environment, the streaming service is best positioned as part of an organization that can provide it with the resources and investment it needs to scale and grow. In addition, Hemisphere’s acquisition of certain TelevisaUnivision Puerto Rican radio stations including WKAQ AM and KQ105 FM will be an ideal complement to WAPA, Puerto Rico’s leading broadcast network. In addition, post transaction closure we will continue to work closely with the TelevisaUnivision Uforia programming team who will leverage its deep music experience to continue to program the KQ105 FM station.”

– Alan Sokol, Chief Executive Officer of Hemisphere

“We have had a longstanding relationship with Hemisphere and this transaction will provide the Company with enhanced financial flexibility to achieve its goals. Hemisphere is a leader in delivering news and entertainment to its growing audiences. We will continue to partner with the management team at Hemisphere to bring our communities the unique and important content they desire.”

– Eric Zinterhofer, founding partner of Searchlight

“The acquisition of Pantaya’s digital assets, including renowned titles like ‘Señorita 89’ and ‘A La Mala’, is an exciting opportunity to build upon our strategic growth plan as we continue to redefine the global streaming landscape. We look forward to welcoming the Pantaya team, the existing subscribers and having access to the content assets which perfectly complement TelevisaUnivision’s industry-leading library.”

– TelevisaUnivision President and Chief Transformation Officer Pierluigi Gazzolo