Dolans strike deal to take Cablevision private
By James Politi in New York
Published: May 2 2007 16:47 | Last updated: May 2 2007 16:47
The Dolan family on Wednesday hailed the benefits of private ownership as it agreed to buy Cablevision in a leveraged buy-out worth $22bn including debt that ended two years of uncertainty over the cable operator’s future.
Charles Dolan, chairman, and James Dolan, chief executive, have been trying to take the company they founded in the 1970s private since May 2005, but ran into resistance from Cablevision’s independent directors, advised by Morgan Stanley and Lehman Brothers.
On Wednesday, as they struck a deal worth $36.26 per share, the Dolans said: “We are very proud of the company’s track record of delivering quality service and innovative products to our customers. We believe the best way to continue this tradition in today’s increasingly competitive environment is as a privately held company.”
Their words echo the arguments made by many top US executives who are increasingly choosing to remove their companies from the public markets in deals driven by private equity groups. For Cablevision, the main challenge is to fend off competition from telecommunications groups such as Verizon that are offering bundled services, including telephone, broadband internet, and cable television.
James Politi discusses the deal that could finally end Cablevision’s privatisation saga
The Cablevision buy-out is structured as a leveraged buy-out, with the Dolans rolling in $2.1bn of their equity. The rest of the purchase price is being financed with a $15.5bn debt package arranged by Merrill Lynch, Bear Stearns and Bank of America.
In morning trading, Cablevision shares rose 7.9 per cent to $35.25 as investors reacted to the announcement. The discount to the offer price reflects an expectation that there will be no further increases in the Dolans bid.
Cablevision serves about 3m households in the New York region, making it an attractive takeover target for a large rival such as Time Warner. Cablevision also owns a collection of entertainment assets including Madison Square Garden, the New York Knicks basketball team and the New York Rangers ice hockey team. It also operates Radio City Music Hall, one of Manhattan’s most famous concert venues.
The deal needs to be approved by a majority of Cablevision shareholders not associated with the Dolan family.