Outdoor Channel stock soared in after-hours trading Tuesday, up 8% (72 cents each) to $9.47 per share as of 6:07 p.m., a sign that investors believe InterMedia Partners has touched off a bidding war with Kroenke Sports & Entertainment for the hunting and fishing network.
InterMedia unexpectedly launched a $240 million counter offer ($9.15 per share) for Outdoor Channel late Tuesday, a bid that could win back the network that was snatched from its grasp in an eerily similar fashion in March. About a week before its deal was to be voted on by Outdoor shareholders at a special meeting, Kroenke Sports lobbed in an unsolicited all-cash offer for the network for $8.75 per share, or about $227 million. A few weeks later, Outdoor deemed the KSE bid superior and accepted their proposal. Outdoor shareholders were scheduled to vote on the KSE bid in a special meeting of shareholders on May 8.
Whether the new bid will force KSE to come back with an even richer offer remains to be seen, but in an interview Tuesday, InterMedia managing partner Peter Kern said he thought the price was pretty lofty as it is.
In a statement, Outdoor Channel acknowledged receipt of the InterMedia offer.
"Outdoor Channel's board of directors are reviewing the proposal to determine the best interests of Outdoor Channel shareholders," the company said in a statement.
Kroenke Sports did not return calls for comment.
“We put a good bid on the table,” Kern said. “On a standalone basis I think the price of Outdoor is rich. I think the reason we can afford it is because of the business synergies. I have a tremendous amount of respect for Stan Kroenke and I don’t know what he will do, but I do believe that nobody is in a better position than us to own this in terms of the economics of buying it. I think we’re all getting into nosebleed territory, but hopefully we put out enough to carry the day.”
Kern said that InterMedia is funding the higher bid with capacity from its original banking partners. He added that in addition to the higher price, this bid is different than its earlier offer in that it does not have a public stock component. If InterMedia succeeds, the combined entity would be privately held.
Asked why the company didn’t just go higher in March when it put forth two separate proposals to meet or better the Kroenke bid, Kern said the difference was the stock component.
“Then, we thought the stock was more valuable than cash for the shareholders,” Kern said. “The [Outdoor] board showed us otherwise.”
Kern added that if Outdoor accepts its bid, it would only have to pay a $1 million breakup fee to Kroenke. When it accepted the Kroenke bid in March, Outdoor had to pay InterMedia a $6.5 million breakup fee.
Besides the Sportsman Channel, which is available in about 30 million homes, InterMedia owns several outdoor-themed magazines – including Guns & Ammo and In-Fishing – and had earlier saw synergies between the channels and the magazine properties, Outdoor is available in about 38 million homes.
Kern said that if Outdoor Channel accepts its new bid, the deal could be approved fairly quickly. That is mainly because the deal is essentially the same as its old agreement – except for the price – which had already gone through federal anti-trust approval. He estimated that its proposal could go before shareholders for a vote within 20 days after being accepted by Outdoor Channel.