Cumulus Media Inc. confirmed Friday that it is negotiating with Citadel Broadcasting Corp., owner of local radio stations 94.5 KSMB, 99.1 KXKC, 104.7 KNEK and 95.5 KRRQ, to acquire Citadel in a deal valued at about $2.5 billion in cash and stock.

Las Vegas-based Citadel, the nation’s third-largest radio network operator, owns and operates 225 radio stations in more than 50 markets and also operates Citadel Media. Citadel had confirmed Thursday that it was in talks to sell itself to its larger rival, which is headquartered in Atlanta. Cumulus is the second-largest radio broadcaster in the United States, with 347 radio stations in 67 domestic media markets.

In May Citadel won court approval for its bankruptcy reorganization plan and as recent as December had rejected another takeover attempt by Cumulus. The radio group declined several takeover approaches by Cumulus last year, according to financial news service DealBook, which reports that the December offer was valued at $31 a share, or $2.1 billion.

Citadel, it seems, changed its mind after Cumulus raised its bid to $37 a share, DealBook notes, and the two began exclusive deal negotiations this week. Read more here.

Both companies have cautioned that they may not reach an agreement.

Under the terms of Cumulus’ proposal, the payment received by Citadel shareholders would consist of a combination of cash and Cumulus stock for each Citadel share and warrant, with a fixed exchange ratio. Based upon the proposed cash and stock election formula, the $37 per share consideration would, on average, be capped at a maximum of $30 per share in cash and a maximum of $14 per share in Cumulus stock. Based on actual elections made by Citadel shareholders and subject to proration, each Citadel shareholder could individually receive more or less cash or Cumulus stock than these amounts, up to the $37 per share total.

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