It would seem that it is only a matter of time before TGNT is acquired by Liberty Media or AT&T. Excerpts from the June 7, 1999 Barron's:
Malone's Moxie
A complex Associated deal
"Cable king John Malone, a shrewd dealmaker, scored another coup last week when Liberty Media Group inked a favorable pact to buy Associated Group, a low-profile telecom outfit controlled by Pittsburg's Berkman family, for about $3 billion in stock.
"Associated's shareholders will get a mix of AT&T and Liberty Media stock that was worth about $69 a share Friday...
"The transaction is complex. Associated Group itself was a sizable owner of AT&T and Liberty Media stock because the Berkman family, which owns 31% of Associated, was an early investor in TCI. Associated also owns 41% of Teligent, a wireless communications and broad-band company.
"Malone took advantage of Associated Group's tax situation -- the company had huge embedded capital gains on its equity holdings --and a potential change in federal tax laws. Next month the Treasury is expected to propose tougher tax rules for "downstream mergers," which involve a target like Associated Group that owns stock in the acquiring company. Under current regulations, only Liberty and AT&T could buy Associated Group on a tax-advantaged basis, giving Malone an added edge.
"'The deal was good for all parties,' maintains Bob Willens, tax expert at Lehman Brothers. He says Associated avoided about $800 million in capital-gains taxes that would have been due if its liquidated its equity holdings. Part of that $800 million effectively went to Associated; the rest, to Liberty Media.
"Associated's equity holdings were worth around $80 a share when the deal was announced, and its cost basis was close to zero.
"Liberty benefited because it received about $80 a share of its own stock, Teligent and AT&T in return for AT&T and Liberty shares.
"The deal gives Liberty control of Teligent, whose stock rose 6 1/2 to 55 1/4 last week, reflecting speculation that Liberty may buy out public stockholders and amid covering my arbitrageurs who had bought Associated Group and sold Teligent short.
"The deal also gives Liberty control of True Position, an Associated Group unit that has a system for located the position of mobile phones.
"Stven Bregman, editor of the Spinoff Report, a New York based research publication, believes True Position could be worth $20 per Associated share. True Position stands to benefit from a federal rule requiring that mobile phone companies be able to locate the position of 67% of 911 calls placed by customers, starting in late 2001." |
