(Bloomberg) — Byron Allen has shored up more investors to back his $23-a-share takeover offer for television broadcaster Tegna Inc., according to people familiar with the matter. 

The media mogul is seeking $8 billion or more in debt and equity to outbid a consortium that includes private equity giant Apollo Global Management Inc. and Standard General, said the people, who asked to not be identified because the matter isn’t public. 

Allen is discussing raising at least $2 billion in preferred equity from Oaktree Capital Group, Fortress Investment Group, the family office of Michael Milken and Ares Management Corp., the people said. Other investors are also in talks to participate in the preferred equity while several banks are in talks to provide debt that could top $6 billion, they added. 

The people said Allen is also in talks to roll his existing businesses including the Weather Channel and local TV stations into the company to help secure financing. He would own all the common equity of the new business, they said.

Divestitures, Remedies 

Allen has also told Tegna that he’s willing to agree to whatever divestitures or remedies are necessary to win regulatory approval from the U.S. Federal Communications Commission and the Justice Department, the people added.

The group bidding against Allen — Standard General and Apollo — has told Tegna it would consider a similar provision as part of a broader negotiation around price, they said.

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Without confirming he was bidding for Tegna, Allen said in an interview Tuesday with Bloomberg TV that he plans to invest $10 billion in local TV stations over the next four years and to buy as many as he can.

“Local news matters, you’re not going to replace that any time soon,” Allen said in the interview during the Milken Global Conference in Beverly Hills, California. 

The big broadcast networks have locked up rights for pro football and other sports that will keep viewers watching, he said. His company also produces some 70 syndicated TV shows that he could run on the local channels.

If his Entertainment Studios were to acquire a large station group, “We have synergies,” Allen said.

Share Jump

Tegna has 64 television stations throughout the U.S. as well as ownership of media properties such as the True Crime Network, according to its website. Its shares fell 0.2% to close at $19.76 in New York on Tuesday, giving the company a market value of about $4.4 billion. The shares rose as much as 3.9% after the close of regular trading before sinking to the closing price.

A comedian-turned-TV producer, Allen’s Entertainment Studios bought the Weather Channel in 2018 for $300 million. He pursued Tegna last year when it explored a sale before talks shut down during the coronavirus pandemic. 

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He’s squaring off against deep-pocketed competition for Tegna. Apollo and Standard General have offered $22 a share in a fully-financed bid for the company, the people said. Standard General is one of Tegna’s largest shareholders, with a 4.8% stake as of June 30, according to data compiled by Bloomberg.

As part of Apollo and Standard General’s bid, broadcast executive Deb McDermott would be chief executive officer and Standard General’s Soo Kim would be controlling shareholder of the company, the people said.

Tegna’s Concerns

Tegna has concerns about Apollo’s ownership stake in Cox Media Group, the people said. That’s because they have stations in several overlapping markets, which could slow a regulatory review, they added. 

While Tegna is open to a sale, there’s no guarantee that either bidder will prevail and Tegna could still decide to remain independent, the people said. 

Representatives for Tegna, Apollo, Ares and Allen declined to comment. Representatives for Standard General, Fortress and Oaktree didn’t immediately respond to requests for comment. 

A spokesman for the financier and philanthropist Milken said, “Milken private investments are just that — private.” 

Dealreporter first reported some of Allen’s financing plans this month. 

(Updates with Allen’s comments in seventh paragraph)

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