The management team bent on taking Insight Communications Co. private moved a step closer to that goal July 29, receiving approval from the MSO's board of directors after upping its price to purchase the remaining publicly held shares of the cable company to $710 million in cash.
According to a press release, Insight Acquisition Corp. — the entity consisting of the MSO's chairman, Sidney Knafel, CEO Michael Willner and private-equity firm The Carlyle Group — will purchase the 86% of Insight's outstanding stock it didn't already own for $11.75 per share in cash. Knafel and Willner collectively own about 14% of Insight's outstanding stock and 62% of its voting rights.
Willner, Knafel and Carlyle proposed taking the ninth-largest MSO in the country (with 1.26 million subscribers) private on March 7 for $10.70 per share, or $650 million. On March 8, it appointed an independent committee of its board of directors — consisting of LLJ Capital senior managing director David Lee and Oxygen Media Inc. chairman and CEO Geraldine Laybourne — to evaluate the proposal. The independent committee hired Citigroup Global Markets and Evercore Partners as financial advisers on March 16.
The $11.75 price represents a 21.4% premium to Insight's closing price on March 4 (the last trading day before the initial announcement) of $9.68. Insight's stock has risen substantially since then, closing at $11.20 on July 28. The stock was priced at $11.56 in early trading July 29, up 36 cents.
The deal must still be approved by Insight's shareholders and pass muster from federal regulators.
“Our current management team looks forward to continuing to lead this great business in the future, while building on our tradition of providing outstanding service and innovative solutions to our customers,” Willner said in a statement.
Insight also released second-quarter financial results last Friday, growing revenue 11% to $279.3 million, but losing 14,200 basic subscribers. Insight added about 1,800 digital-cable customers, 23,500 high-speed Internet subscribers and 4,900 telephone subscribers.
Operating income before depreciation and amortization was up 15% in the period to $122.4 million.
While the basic-subscriber losses were lower than the 15,500 decline in the same quarter last year, Insight said it is still feeling the heat from local-into-local launches by direct-broadcast satellite competitors and bundled offers from digital-subscriber-line service providers.
To reverse that trend, Insight said in a statement, it will increase its customer-retention efforts by focusing on bundling, enhancing and differentiating its video offerings and providing video on demand, HDTV and digital video recorders.
Insight also said its concentrating on improving customer service through quicker response times, increased education on product offerings and more spending on sales and marketing efforts.