Expands its radio footprint. The company plans to acquire Cherry Creek Broadcasting's 35 stations in nine markets for $18.75 million. Given overlap in certain markets, the company plans to divest six radio stations. The transaction is expected to close in Q3 2022. The company will now serve a platform of 356 local stations in 74 markets, up from 67. We estimate that the company paid an attractive multiple, less than 7 times cash flow. Plans to introduce Digital solutions. Management indicated that the stations offer the ability to employ its Digital First strategy, with Townsquare Ignite, its programmatic advertising business, and Townsquare Interactive, its subscription based, digital agency business. As such, we anticipate enhanced Digital revenue and adj. EBITDA growth from the acquired stations. Strong balance sheet. As of December 31, 2021, the company had $50.5 million in cash and, as such, the company has plenty of financial flexibility to complete the transaction with cash on hand. Notably, management indicated that in spite of the acquisition, the company is on track to reach its goal of 4 times net leverage by year end and expects that the transaction will be net leverage neutral. Transaction viewed favorably. The acquisition is in the company's lane of small market radio stations, expanding its platform outside of the Top 50 markets in the US as ranked by population. The nine markets being acquired include Butte, MT; Great Falls, MT; Missoula, MT; Montrose Co; Sierra Vista, AZ; St. George-Cedar City, UT, Tri-Cities, WA; Wenatche, WA and Williston, ND. In addition, the acquisition is in line with management's stated strategy of acquiring stations that could benefit from its Digital First strategy. Outperform rating. Near current levels, the TSQ shares trade at a compelling 6.1 times EV to our 2023 adj. EBITDA estimate. The shares trade at a Radio multiple, while the company should trade more in line with its Digital peers. Our rating is Outperform with a $29 price target. Read More >>