Media conglomerate Cox Enterprises Inc. unveiled a proposal to acquire the outstanding publicly held minority interest in cable operator Cox Communications Inc. Clearly tired of watching the Cox cable stock trade near a 52-week low, Cox Enterprises offered to pay Cox Communications shareholders $32 per share, a 14% premium over the trailing ten-day average closing price.
Not surprisingly, shares of Cox Communications skyrocketed 20% on the news to top $33. Whether merely a gambit to pump up the price of its cable shares or a serious proposal, the move clearly grabbed Wall Street's attention.
In a news release, Cox Enterprises Chairman and CEO James C. Kennedy argued 'An increasingly competitive environment convinces us that future investments in the cable industry are best made through a private company structure.'
Feeling continuing pressure from satellite and telcos, Cox may very well see the need to make capital investments in its cable business at levels beyond which public investors are willing to stomach, not the mention to need to sacrifice operating cash flow and earnings to win market share. If that's the case, we wish the Kennedy's luck to spend as needed, fight aggressively, and win the broadband battle!
See the corporate news release at http://www.coxenterprises.com/corp/presscenter/viewPressRelease.asp?articleid=554