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Mediacom CEO Drops Bid to Go Private

Jeff Baumgartner
8/31/2010

Mediacom Communications Corp. won't be following in the footsteps of Cox Communications Inc. , RCN Corp. , and Insight Communications Co. Inc. by going private… at least not anytime soon. (See RCN Going Private Via $1.2B Sale and Private Equity Firms Gain Some Insight .)

On Tuesday, Mediacom founder, chairman, and CEO Rocco Commisso expressed his frustration with the process by withdrawing a non-binding offer to buy up all the shares of the MSO he doesn't currently own for $6 per share. Commisso currently owns about 40 percent of Mediacom's common stock. (See Mediacom Staying Public.)

Commisso pitched the idea, which reportedly valued Mediacom at $427 million, on May 31, 2010. The $6 per-share price he offered represented a premium of nearly 13 percent from the stock's $5.33 closing price the day before he made the offer. Mediacom shares promptly rose to $6.27 each by the end of trading on June 1. They've been as high as $7.65 since Commisso announced his original proposal.

Investors went on a selling spree Tuesday in reaction to Commisso's withdrawal announcement. Shares were down $1.12, or 16.35 percent, to $5.73 per share in morning trading today.

Commisso said he withdrew his offer after the company's board of directors "rejected a meaningful increase to his initial offer price" that would remain subject to the approval of the holders of a majority of the shares that he does not own. The amount of Commisso's proposed increase hasn't been disclosed.

He was particularly frustrated that a Special Committee, brought on in mid-June to evaluate the proposal, rejected Commisso's latest offer before Mediacom's public shareholders had the chance to weigh it and make a decision on their own. (See Mediacom Hires Privacy Advisors.)

"I am very disappointed with the highly unusual process and ground rules established by the Special Committee and its financial and legal advisors to evaluate my proposal," Commisso said, in a statement. "I firmly believe that the Special Committee's decision is not in the best interests of Mediacom's shareholders."

Commisso has since terminated discussions with the Special Committee, and reiterated that he has no interest in selling his shares of Mediacom, which has about 1.2 million basic video subscribers and is the eight-largest incumbent cable MSO in the US.

Mediacom has been aggressive with upgrades this year, expecting to have Docsis 3.0 deployed in half its footprint by the end of the year. The company is also in the process of scrubbing its VoIP relationship with Sprint Corp. (NYSE: S) and taking the service in-house. (See Mediacom Snipping VoIP Ties to Sprint and Mediacom Widening Wideband Reach .)

Mediacom is the latest MSO to try and fail to go private. The Dolan family made a third attempt to take Cablevision Systems Corp. (NYSE: CVC) private in 2007, but shareholders rejected a bid of $36.26 per share. (See Cablevision Shareholders Reject Dolan Bid, Cablevision Bid Faces Shareholder Opposition , and Cablevision Keeps Family Ties .)

— Jeff Baumgartner, Site Editor, Light Reading Cable

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