Board gives Dolans their privacy
Latest offer for Cablevision gets OK; stock jumps 9%NEW YORK -- After several failed attempts, the Dolan family finally is on track to take private cable operator Cablevision Systems Corp., which it controls, in a sweetened $10.6 billion transaction.
News of an agreement on the deal boosted Cablevision shares to new heights Wednesday. The stock was up 8% at $35.30 in midday trading. Its previous 52-week high stood at $33.
While the Dolan family controls a majority of Cablevision, the company said a majority of other shareholders must also approve the proposed deal.
The cable firm confirmed market talk of a deal early Wednesday, saying it has reached a definitive sale agreement with an entity created by the Dolans for $36.26 per share in cash. The transaction implies an enterprise value of approximately $22 billion, according to Cablevision.
The agreement is a result of what the company said were "extensive negotiations" between the Dolans and a special transaction committee of independent directors of Cablevision, which had rejected previous buyout offers.
Based on the recommendation of the committee, Cablevision's board has already approved the transaction, the company said.
The buyout price of $36.26 per share represents a 34% premium to the Dolans' $27 a share offer from October and a 21% premium to its $30 per share offer from January and more than a 50% premium to Cablevision's closing price before the original October bid.
Chairman Charles Dolan and son and CEO James Dolan on Wednesday lauded the company's track record of delivering "quality service and innovative products" to customers. "We believe the best way to continue this tradition in today's increasingly competitive environment is as a privately held company," they added. "This new structure and an entrepreneurial perspective will enable us to keep growing the business with our talented management team and dedicated employees."
In the proposed transaction, the Dolans will contribute approximately $2.1 billion in equity through a reinvestment of their Cablevision shares in the new privately held company. Investment banks have committed to provide approximately $15.5 billion in debt financing to fund the deal.
The buyout news once again created Wall Street buzz that the Dolans could down the line sell Cablevision's cable systems to Time Warner Cable, which reported its first quarterly earnings as a public company on Wednesday.
On parent company Time Warner Inc.'s earnings call, an analyst asked TW chairman and CEO Richard Parsons about Cablevision. "The family is buying, not selling," he replied. "But if the Dolans were to sell off their cable systems, "we'd certainly want to be on their list of people to talk to," he added.