Shareholders of top-10 cable operator Mediacom will vote on accepting the CEO's offer to buy them out and take the company private early next month. The offer from CEO Rocco Commisso is for $8.75 a share, but the stock has been trading slightly higher, suggesting that investors may benefit more over time if the company stays on the NASDAQ.
The stock price was trading at $8.80 in midday trading Thursday as Mediacom announced the March 4 vote.
After a special committee of the Mediacom board recommended acceptance of the $8.75 offer last fall, the company and Commisso entered into an agreement.
There is a possibility that shareholders could receive more than the $8.80 trading price if a settlement on lawsuits -- effectively alleging Commisso is getting too sweet a deal -- is enacted. Shareholders in question could receive 25 cents a share, minus attorneys' and other fees to add to the $8.75.
Cable stocks have been performing well -- with Comcast, Time Warner and Cablevision not far from 52-week highs. Perhaps helped by Commisso's offers for privatization -- he made a preliminary one for $6 in May -- Mediacom shares have more than doubled.
A rejection of Commisso's offer would likely bring a short-term drop in share price, but the long-term prognosis might be viewed as strong. Still, countervailing threats could be a rise in cord-cutting and content rights costs.
The special committee of two independent Mediacom directors that endorsed the $8.75 proposal relied partly on analysis by Barclays Capital to reach its conclusion.
The offer price would be a 112% premium over where Mediacom closed on Feb. 3, 2010. Commisso founded the company in 1995 and took it public in 2000. As of Sept. 30, 2010, it had 535,000 video customers, down from 561,000 a year ago. Net income for the nine-month period was down by about $27 million versus the year before, even as revenues rose.