The value of Nexstar's takeover of Tegna is what amount in billions of dollars?

• A. $5.0 B
• B. $6.0 B
• C. $6.2 B
• D. $7.0 B

Answer: (C)

This question is about how deal value is reported in mergers and acquisitions. When a buyer announces a takeover, the figure often quoted is the total value of the transaction, called the enterprise value, which includes the price paid to shareholders plus the debt the buyer agrees to take on and other liabilities, minus any cash on the target’s balance sheet. In Nexstar’s takeover of Tegna, the reported figure comes out to about six point two billion dollars because it represents this total enterprise value, not just the cash price paid to Tegna’s shareholders. If you only counted the equity portion (the price per share times shares outstanding), you’d get a smaller number; the debt and other liabilities push the total closer to six point two. So six point two billion is the value of the deal as described in the coverage.