Cox cable board OKs buyout offer
The Atlanta Journal-Constitution
October 20, 2004 Wednesday Home Edition
Cox Enterprises, which announced plans in August to take Cox Communications private, said Tuesday that a sweetened $8.3 billion offer had been accepted by the cable company's board.
The $34.75-per-share offer represents an 8.6 percent premium over the $32 a share Cox Enterprises originally offered for the shares it doesn't already own in the nation's third-largest cable operator. Cox Enterprises currently owns a 62 percent stake in Cox Communications.
The new offer was unanimously accepted by the Cox Communications board on Monday.
Cox Enterprises, also owner of The Atlanta Journal-Constitution, said it will begin a cash tender offer in about two weeks for those 240 million shares.
The transaction, valued at $8.5 billion when related fees and expenses are included, is expected to be completed in mid-December.
At that time, Cox Communications will become a wholly owned subsidiary of Cox Enterprises.
The latter is one of the nation's largest media companies and providers of automotive services.
The privately held company, with 77,000 employees, posted 2003 revenue of $10.7 billion.
"The transaction will allow Cox Enterprises to increase its investment in the cable industry and strengthen CEI as a whole," said Jim Kennedy, chairman and chief executive.
"We're looking forward to running our business with a stronger long-term focus and continuing to provide our customers with outstanding service," said Jim Robbins, president and chief executive of Cox Communications.
Some Wall Street analysts predict faster growth at Cox Communications as it uses its free cash flow to more aggressively roll out digital video and voice offerings to compete with phone companies and satellite providers.
"We believe Cox Enterprises' bid may be driven by the company's willingness to more aggressively court bundled customers in the near term in order to drive longer-term growth, a view that investors are unlikely to welcome at this point if it sacrifices near-term free cash flow generation, pricing or margins," observed UBS analyst Aryeh Bourkoff when the deal was first announced.
Citigroup, Lehman Brothers and JPMorgan will provide $10 billion to fund the transaction and pay related fees and expenses, and to provide Cox Enterprises and Cox Communications with additional liquidity.
Meanwhile, the companies said they reached "memoranda of understanding" with attorneys who had filed lawsuits on behalf of shareholders seeking to block the takeover. The companies said they expect the memoranda to lead to a settlement.