November 16, 2015 / 1:46 PM / 2 years ago

UPDATE 2-Media General rejects Nexstar's takeover offer, but open to talks

* Media General says open to further talks with Nexstar

* Nexstar "surprised" by rejection, says open to talks

* A deal would create the No.2 U.S. local TV station operator

* Media General shares down 1.9 pct, Nexstar up 0.3 pct (Adds Nexstar response, shares)

Nov 16 (Reuters) - Media General rejected Nexstar Broadcasting Group Inc's $4.1 billion takeover offer, saying it significantly undervalued the company, but left the door open for a deal.

Media General, which itself is in the process of buying diversified media company Meredith Corp, said on Monday it would engage in private talks with Nexstar but there was no guarantee a deal could be reached.

A deal between the two will create the second-biggest local TV station operator in the United States.

"The proposal substantially discounts Media General's standalone growth prospects," the company said.

Nexstar went public with its $4.1 billion offer in September after Media General rejected a private proposal made in August.

Nexstar on Monday said, "We are surprised that Media General's board considers the value of our proposal to be inadequate today, however, we are willing to engage with them to hear their perspectives."

Nexstar on Sept. 28 had offered $10.50 per share in cash and 0.0898 of its shares for each Media General share, valuing the company at $14.50 per share.

The offer currently values Media General at $15.70 per share, a premium of 41 percent over the stock's close on Sept. 25, Nexstar said on Monday.

Media General shares were down 1.9 percent at $15.17 in morning trading on Monday. Nexstar shares were up 0.3 percent at $58.09.

Media General offered to buy Meredith in September for about $2.34 billion to create the No.3 U.S. regional TV operator, a deal, the company said, its board continued to recommend.

Meredith shares were flat.

RBC Capital Markets LLC and Goldman Sachs & Co are financial advisers to Media General and Fried, Frank, Harris, Shriver & Jacobson LLP and Weil, Gotshal & Manges LLP are legal counsel.

BofA Merrill Lynch is Nexstar's financial adviser and Kirkland & Ellis LLP its legal counsel. (Reporting by Devika Krishna Kumar in Bengaluru; Editing by Saumyadeb Chakrabarty and by Savio D'Souza)

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