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Cablevision Bid Faces Shareholder Opposition

Shares in Cablevision Systems Corp. (NYSE: CVC) hit a speed bump, dipping 53 cents (1.5%) to $33.90 as opposition continued to mount against the Dolan Family Group's plans to take the MSO private for $36.26 per share, or about $10.6 billion. (See Cablevision Keeps Family Ties .)

A shareholder vote is scheduled for the morning of Wednesday, Oct. 24, at Cablevision's headquarters in Bethpage, N.Y., but questions continue to swirl about whether the family can obtain enough votes to get the deal done. (See Cablevision Sets Shareholder Vote .)

Mario Gabelli, whose firm, Gamco Investors Inc., holds an 8.3 percent stake in Cablevision, has stated he believes the stock could climb up to $70 in five years, and, according to a letter to Cablevision Chairman Charles Dolan dated October 8, it appears likely that he will oppose the family's deal. (See Litigation 'R' Us .)

While approving of the job Dolan and his management team have done so far with the cable operator and its holdings, Gabelli added that "we believe our clients are best served by staying the course in Cablevision."

Possibly complicating matters further, the ISS Governance Service, which handles proxy voting, reportedly advised clients last Friday to vote against the deal, citing that analysts believe the value of Cablevision is higher than $36.26 per share.

"We disagree with ISS's opinion and urge Cablevision shareholders to vote for the transaction, which provides a substantial cash premium and is the culmination of a two-year negotiation process between a Special Committee of independent directors and the Dolan Family Group," a Cablevision spokeswoman said, in a prepared statement.

In early July, as Cablevision shares spiked to a five-year high, Sanford C. Bernstein & Co. Inc. senior analyst Craig Moffett suggested that the MSO's stock could be worth at least twice the current offering price. (See Stock Spike Threatens Cablevision Deal and Dolan-ing Out the Dough.)

As disclosed in a Securities and Exchange Commission (SEC) filing made Oct. 5, the privatization deal carries a condition that the majority of Cablevision class A common stock held by public stockholders -- a "majority of the minority" -- must give the merger their blessing. They had until last Friday (Oct. 12) to disclose how many shares they owned as of Oct. 4, 2007.

— Jeff Baumgartner, Site Editor, Cable Digital News

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