Founder and CEO Rocco Commisso has submitted a bid to buy out the public shareholders of Mediacom Communications for $6 per share. News of the offer sent the stock price above that six buck level, indicating that Wall Street thinks the opening bid will be sweetened.
Commisso already 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.
At $6 per share, Commisso is proposing to pay approximately $240 million to buy out the other shareholders. Including some $3.7 billion in debt to be assumed, the going private transaction values Mediacomm at about $4.1 billion.
Mediacomm announced that its Board of Directors has appointed independent directors Thomas V. Reifenheiser and Natale S. Ricciardi to a special committee which will consider the proposed buyout. The company said the proposal should have no impact on day-to-day-business operations.
The letter from Commisso to the Board of Directors appears below.
RBR-TVBR observation: For all of his complaining about the financial burden that paying retransmission consent fees to broadcasters is placing on his company, it looks like Rocco Commisso still thinks owning cable television systems is a pretty good business. Congress should take note and ignore his overly theatrical and disingenuous protests.
Here is the full text of the non-binding proposal letter from Commisso to the board:
May 31, 2010
Board of Directors
Mediacom Communications Corporation
100 Crystal Run Road
Middletown, NY 10941
Members of the Board:
I am pleased to propose to acquire by merger, for a purchase price of $6.00 per share in cash, all of the outstanding shares of Class A common stock and Class B common stock of Mediacom Communications Corporation (the “Company”) that I do not already beneficially own. I expect to finance the transaction through borrowings under the Company’s existing credit facilities.
I believe that this proposal offers compelling value and is in the best interests of the Company and all of its public shareholders. As you are aware, I beneficially own approximately 40% of the Company’s common stock representing about 87% of the voting power. Although the proposed transaction does not involve a change of control, this offer reflects a 13% premium over the closing price of the Company’s Class A shares on Friday, May 28, 2010, and a premium of 16% over the six-month average closing price. The offer also represents an increase of 34% over the closing price of the Class A common stock on December 31, 2009.
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.
I anticipate that you will form a special committee of independent directors (the “Special Committee”) to respond to my proposal on behalf of the Company’s public shareholders. I also encourage the Special Committee to retain its own legal and financial advisors to assist in its review. In considering my proposal, you should be aware that I am interested only in pursuing the proposed transaction and that I am not interested in selling my stake in the Company or considering any strategic transaction involving the Company.
I am prepared to move very quickly to negotiate a transaction with the Special Committee and its advisors, and believe that my familiarity with the Company and its operations will allow us to finalize definitive documentation on an accelerated basis. Of course, neither the Company nor I will have any legal obligation with respect to the proposal or any transaction unless and until a definitive merger agreement satisfactory to me and recommended by the Special Committee and approved by the Board of Directors is executed and delivered.
I look forward to discussing this proposal further with the Special Committee and its legal and financial advisors in the very near future.
Rocco B. Commisso