Meredith & Time Stock Soar After Merger Announcement

Shares of Meredith (NYSE:MDP) and Time Inc. (NYSE:TIME) surged on Monday morning following an official announcement that Meredith agreed to purchase the publisher of Time and People.

Meredith, the media company that owns magazine publications such as Better Homes & Gardens and Family Circle, announced on Sunday that it reached a “binding agreement to acquire all outstanding shares of Time Inc.”

Meredith agreed to purchase shares of Time for $18.50 per share, which marks a roughly a 9.5% premium compared to Friday's closing price. The all-cash deal—including the assumption of Time’s debt—is valued at $2.8 billion, according to company statements. An influx of $650 million in financial backing from Koch Equity Development helped push the merger through.

Both companies’ boards unanimously approved the deal that is expected to close in about 60 days.

Talks of a Meredith and Time deal first popped up in 2013. Merger negations also fell apart earlier this year. However, two weeks ago, reports began to surface that the Koch brothers would try to help Meredith buy Time. This news helped renew many Time investors’ hopes that a buyout might finally happen.

Time has struggled recently and changed some of its business practices in order to cope with the downturn. The company is set to cut down the number of print issues of the once-weekly Sports Illustratedto 27 in 2018, after limiting the historic sports publication to 38 in 2017.

The publisher of Time also made an aggressive shift to video, and even recently announced its second streaming television channel, “Sports Illustrated TV.”

"We are creating a premier media company serving nearly 200 million American consumers across industry-leading digital, television, print, video, mobile, and social platforms positioned for growth," Meredith CEO Stephen Lacy said in a statement.

"We are adding the rich content-creation capabilities of some of the media industry's strongest national brands to a powerful local television business that is generating record earnings, offering advertisers and marketers unparalleled reach to American adults. We are also creating a powerful digital media business with 170 million monthly unique visitors in the U.S. and over 10 billion annual video views, enhancing Meredith's leadership position in reaching Millennials."

Many Time and Meredith investors are clearly excited by the deal, as shares of both companies skyrocketed on Monday morning. Shares of Meredith jumped over 12% to reach a new 52-week high of $70.70 per share.

The official buyout price tag marked a 46% premium compared to Time’s closing price on Nov. 15—a day before initial merger reports surfaced, when investors seemed far less hopeful in the company’s long-term viability. Today, Time saw its stock price climb as high as 9% in morning trading.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think. See This Ticker Free >>