The third time was the charm.
Hours after press reports hit the streets that Cablevision Systems’ ruling Dolan family -- led by chairman Charles Dolan and his son, CEO James Dolan -- was in talks to take the Bethpage, N.Y.-based cable operator private in a $10.5 billion deal, the company announced that its offer was accepted by an independent committee of directors.
In a statement, Cablevision said the Dolans’ offer of $36.26 per share for the stock in the company it did not already own had been accepted. The price, including outstanding debt, values Cablevision at about $22 billion.
This was the third time in two years the Dolan family tried to take Cablevision private. A $7.9 billion offer made in 2005 was rejected by the special committee as too complicated -- it involved spinning off its Rainbow Media Holdings unit -- and a revised offer made last October for $27 per share, later raised to $30, was rejected by the same committee in mid-January as too low.
“Following extensive negotiations, the special transaction committee of independent directors of Cablevision, advised by independent financial and legal advisors, determined that the transaction is in the best interests of Cablevision’s public shareholders,” Cablevision said in a prepared statement. “Based on the recommendation of the special transaction committee, Cablevision’s board of directors, including independent directors, voted to approve the transaction.”
The price -- which many analysts still believe is too low -- represents a 34% premium to the Dolan family’s previous offer of $27 per share Oct. 8 and a 21% premium to its $30 per share offer in January, which was rejected by the special committee earlier this year. However, the price is about an 11% premium to Cablevision’s closing share price of $32.67 per share May 1.
Cablevision shares soared on the deal, rising $2.73 each (8.4%) in early trading Wednesday to $35.40 per share.
According to Cablevision, the Dolan family group will contribute approximately $2.1 billion in equity to the transaction through reinvestment of its Cablevision shares in the new privately held company. Merrill Lynch, Bear, Stearns and Bank of America have committed to provide approximately $15.5 billion in debt financing to fund the merger consideration and refinance certain bank indebtedness of Cablevision. The company’s existing notes and debentures will remain outstanding.
The transaction is conditioned on a “majority of the minority” voting provision, according to Cablevision’s statement, which requires approval by holders of a majority of Cablevision’s outstanding class-A shares not held by the Dolan family group or Cablevision’s directors and executive officers. The deal is also subject to certain regulatory approvals.
“The Dolan family founded Cablevision nearly 35 years ago, and we are very proud of the company’s track record of delivering quality service and innovative products to our customers," Charles and James Dolan said in a prepared statement. “We believe the best way to continue this tradition in today’s increasingly competitive environment is as a privately held company. This new structure and an entrepreneurial perspective will enable us to keep growing the business with our talented management team and dedicated employees.”
The Dolan family received financial advice from Bear, Stearns and Merrill Lynch and legal advice from Debevoise & Plimpton and Skadden, Arps, Slate, Meagher & Flom. The lenders were represented by Shearman & Sterling.