Cox owners offer $7.9B buyout
No. 4 cable TV company's controlling family wants to expand business without shareholder pressure.
August 2, 2004: 6:24 AM EDT
NEW YORK (Reuters) - The family that controls a majority of Cox Communications Inc. offered Monday to take the No. 4 U.S. cable television company private for $7.9 billion in cash.
In a statement, media company Cox Enterprises offered to buy the 38 percent it does not already own for $32 per share, which is 16 percent above the Cox Communications closing stock price Friday of $27.58. Both companies are based in Atlanta.
The transaction would allow the controlling shareholders to expand the cable business without having to address shareholder pressure to meet quarterly earnings targets.
Cox Enterprises is controlled by founder James Cox's daughters, Barbara Cox Anthony and Anne Cox Chambers, whose $11.2 billion net worth this year ranked them at No. 23 among the world's richest people, according to Forbes magazine.
Cox Communications would become a wholly owned unit of Cox Enterprises, which also owns newspapers such as The Atlanta Journal-Constitution and television and radio stations.
Cox Communications did not immediately return a call seeking comment.
"An increasingly competitive environment convinces us that future investments in the cable industry are best made through a private company structure," said James Kennedy, chief executive of Cox Enterprises, in a statement.
Cable TV operators have spent upward of $80 billion to upgrade their systems to counter competition from satellite TV companies, but investors have been impatient for results.
Cox Communications' competitors include cable TV operators such as Comcast Corp., (CMCSA: Research, Estimates) satellite operators such asDirecTV Group (DTV: Research, Estimates) and EchoStar Communications Corp., (DISH: Research, Estimates) and phone companies such as SBC Communications. (SBC: Research, Estimates)
Shares of Cox (COX: Research, Estimates) closed Friday near their 52-week low of $27.21, and 25 percent below their 52-week high of $36.95 set in January.
Cox Enterprises, which has a 73 percent voting stake in Cox Communications, said it expects the acquisition will require approval of a special committee of Cox Communications' independent directors. It said it has no interest in disposing of its controlling equity and voting stake.
Last Thursday, Cox Communications said second-quarter net income fell 47 percent, including items, to $62.7 million, or 10 cents per share, from $117.7 million, or 19 cents per share, a year earlier. Revenue rose 12 percent to $1.59 billion.
Cox Communications has been one of the more conservative acquirers, though in late 2001 it lost out to Comcast in the battle to buy AT&T Corp.'s cable assets.
Cox Enterprises said Citigroup Global Markets Inc. and Lehman Brothers Inc., its financial advisers, have committed to provide $10 billion of financing.
The sum includes $7.9 billion to fund the buyout, and $2.1 billion to refinance debt, and for working capital and other purposes. |
