Mediacom Communications founder and CEO Rocco Commisso announced Tuesday (8/31) that he has withdrawn his May 31st offer to buy out other shareholders and take the cable MSO private. Commisso lashed out at the company’s independent directors for rejecting a “meaningful increase” to his original bid of $6 per share. The news sent the stock into a freefall on Tuesday. It closed at $5.80, down over 15% for the day.
“I am very disappointed with the highly unusual process and ground rules established by the Special Committee and its financial and legal advisors to evaluate my proposal. I firmly believe that the Special Committee’s decision is not in the best interests of Mediacom’s shareholders,” Commisso said in a statement withdrawing his going private bid.
Commisso’s announcement expressed particular frustration that the Special Committee’s rejection of his revised offer deprived Mediacom’s public shareholders of the opportunity to decide for themselves whether or not to accept a price for their shares that represents a significant premium to the closing price of Mediacom shares on the trading day immediately prior to the May 31st offer and to the average closing price over the six-month period prior to such date.
Based on the rejection of his increased offer, the exact amount of which was not disclosed, Commisso said he had determined to withdraw his proposal and terminate discussions with the Special Committee. He reiterated that he currently has no interest in entering into a transaction to sell his Mediacom shares.
Commisso owns nearly 28.1 million of the cable MSO’s 68.1 million shares outstanding. And since more than 27 million of his shares are the company’s super-voting Class B shares, he holds 87% of the voting power. Thus, he can veto any attempt to sell the company to anyone else.
The offer to buy Mediacom at $6 per share had valued the company at about $4.1 billion, including assumption of approximately $3.7 billion in debt.
RBR-TVBR observation: The Wall Street speculators took a hit on this one. Based on speculation about an increased bid, the stock price had been bid up past $7 per share for a while and had closed Monday (8/30) at $6.85. The expectation that Commisso would raise his bid was correct, but the market hadn’t banked on the independent directors driving such a hard bargain that Commisso would walk away.