Mediacom announced today that its board of directors received a non-binding bid proposal from chairman, CEO and founder Rocco Commisso to take the company private.
Commisso has bid $6 per share – which is an increase of 13 percent over the stock’s Friday closing price and a 16 percent increase over the six-month average closing price – for all of the class A and class B shares he doesn’t already own. At the end of April, Mediacom had roughly 68.1 million shares of class A and B outstanding, bringing the total value of the deal to about $408.6 million.
Commisso needs the approval of Mediacom’s board and stockholders to take the company private.
“I believe that this proposal offers compelling value and is in the best interests of the company and all of its public shareholders,” Commisso wrote in a letter to the board. “As you are aware, I beneficially own approximately 40 percent of the company’s common stock, representing about 87 percent of the voting power.
“You should know that following the transaction, I plan to continue in my current roles and, together with our management team, intend on leading our company and its valuable employee base well into the future.”
Mediacom’s board appointed independent directors Thomas V. Reifenheiser and Natale S. Ricciardi to a special committee that will consider Commisso’s proposal. The special committee will retain independent financial advisors and legal counsel to assist in its work.
Commisso also wrote in his letter that he was prepared to move quickly to negotiate the transaction with the special committee and its advisors.
Mediacom said it didn’t anticipate that Commisso’s bid would have any impact on day-to-day business operations.
Mediacom, the nation’s seventh-largest cable operator, also said the proposed transaction would not result in a change of control with respect to the company’s existing debt arrangements. For the recently completed first quarter, Mediacom had $394 million of long-term debt that was due quarterly against $223.1 million in current assets.
Mediacom, which serves 1.3 million subscribers, with a large chunk of that number based in Iowa, increased its revenue-generating units in the first quarter but lost 4,000 basic video subscribers.
Cox Communications went private in 2004, and Insight Communications made the switch in 2008, but the Dolan family has failed twice over the past five years in its attempts to take Cablevision private.