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The Dolan family on Sunday night launched a fresh attempt to take Cablevision private, after offering to buy the US cable operator it controls in a $19.2bn deal, including debt.
The bid, contained in a letter to Cablevision’s board, marks the second time in less than 18 months that the Dolan family has tried to remove the company from the public markets.
The move reflects the challenges facing cable companies as they grapple with the competitive threat posed by telecommunications groups such as Verizon that are offering bundled services, including cable television, to their customers.
“Succeeding in this fiercely competitive environment requires a long-term entrepreneurial management perspective that is not constrained by the public markets’ constant focus on short term result,” wrote Charles Dolan, the chairman, and James Dolan, the chief executive.
The Dolans are offering to pay $27 per share to buy Cablevision, valuing the company’s equity at $7.9bn. The planned deal will be financed with the Dolans’ $1.7bn equity stake in the company, as well as a $10.9bn debt package arranged by Bear Stearns and Merrill Lynch.
In May 2005, the Dolans offered to buy Cablevision in a more complex transaction that involved a break-up of the company into two units, one including the cable assets, and the other including a number of cable TV channels and Madison Square Garden.
But that plan was withdrawn, after the Dolans couldn’t reach an agreement over price and certainty of value with Cablevision’s special committee of independent directors, which is also expected to review the latest bid.
At $27 per share, the new offer, which no longer includes a split of the assets, is nearly 15 per cent higher than last year’s offer of $33.50 per share, when adjusted for the $10 per share special dividend paid out by Cablevision to its investors in April, the Dolans said in the letter. On Friday, Cablevision shares were trading at $23.93.
If accepted by the Cablevision board, the Dolans’ bid would mark the latest in a string of going-private transactions in corporate America, which is being fuelled by the availability of cheap debt.
The attractiveness of such moves is especially great in businesses that generate little growth but a lot of cash, such as cable. One person close to the Dolans’ bid said that behind the move lay a sense that the debt markets would value Cablevision more highly than the equity markets.
Founded in 1973 by Charles Dolan, Cablevision is one of the largest cable companies in the New York region, serving 3m households. Often singled out as an attractive acquisition target for the likes of Time Warner, the company has over the years experienced a number of disagreements within the founding family over its future direction. Last month, Cablevision reported a 15.6 per cent jump in net revenue for the second quarter to $1.4bn. Operating income grew 75.1% to $166.5 million.
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