Oldie but goodie:
Liberty Makes New Bid for Ascent
By Justin Dini
Source: Don't know ;-)
2/22/00 12:16 PM ET
Liberty Media (LMG.A:NYSE) said Tuesday that it has resurrected its offer to acquire Ascent Entertainment (GOAL:Nasdaq), agreeing to buy the Denver-based company for $460 million in cash.
Ascent shares soared on the news, jumping 4 11/16, or 46%, to 14 13/16 by late Tuesday morning. Liberty's shares were down 1/4 at 50 3/8. Ascent finished up 4 11/16, or 43.6%, to 14 13/16, while shares of Liberty closed the day down 5/8, or 1.2%, at 50.
The agreement marks the second go-round for the two companies. Englewood, Colo.-based Liberty, a subsidiary of AT&T (T:NYSE), had agreed to acquire Ascent in October in a deal that was contingent on Ascent selling its sports properties. At the time, Ascent had an agreement in place to sell the Denver Nuggets, the Colorado Avalanche and the two teams' home, the Pepsi Center. When the deal to sell the sports properties collapsed, the Liberty deal fell apart as well.
While Ascent has yet to find a buyer for the sports properties, Liberty is now willing to take the risk of selling the properties itself, said Larry Petrella, a media industry analyst at Lehman Brothers. "In October, Liberty said, 'I'm not willing to mess around with selling the sports team,' and wouldn't make the deal without a firm deal in place," said Petrella, who rates Liberty a strong buy. He does not have a rating on Ascent, and his firm has not done any underwriting for the firms. Liberty said Tuesday that it would try to sell the teams and the arena.
Under the terms of Tuesday's announcement, Liberty is paying less per share -- $15.25 in cash -- than it would have under the October agreement. In that all-stock deal, Liberty would have paid the equivalent of $17.26 a share. That deal was valued at $513 million at the time of the announcement.
Liberty will also assume $295 million in Ascent's debt.
Ascent appears willing to accept less now because Liberty is making a fixed cash offer rather than stock, the value of which can fluctuate, and because Liberty is willing to assume the risk of selling the sports properties.
Petrella of Lehman said he liked the terms of the new deal. "They're buying Ascent at a reasonable multiple," he said. "It's more what Liberty does with the assets." Lehman has done some underwriting with Liberty in the past.
Ascent's key asset is its 57% stake in On Command (ONCO:), one of the world's largest providers of hotel pay-per-view entertainment.
The deal could make for some interesting synergies with big hotel franchiser Cendant (CD:NYSE). In December, Liberty agreed to buy a 2.5% stake in Cendant for $400 million and Liberty's chairman, John Malone, agreed to join Cendant's board and buy another million shares himself.
"From a corporate perspective, Liberty has had a long-term interest in the consumer access offered through On Command Corp.'s service," said Gary S. Howard, executive vice president and chief operating officer at Liberty, in a statement. "Given our extensive relationships in video programming, interactive television and high-speed data services, the acquisition of On Command will position us perfectly to offer even better and more comprehensive services for business and recreational travelers."
The deal is expected to close in the second quarter and is subject to shareholder approval and other customer conditions. |
