UPDATE 3-Mediacom shares rise on CEO's offer to take company pvt

Tue Jun 1, 2010 11:46am EDT

* Says offer from CEO Rocco Commisso

* Offer at 13 pct premium

* Shares rise 17 pct (Adds analyst's comments, details; updates share movement)

By Saqib Iqbal Ahmed

BANGALORE, June 1 (Reuters) - Mediacom Communications Corp MCCC.O said Chief Executive Rocco Commisso has offered to take the cable television system operator private at $6 a share, a premium of 13 percent to the stock's Friday closing price.

Commisso, the CEO and chairman who founded Mediacom in 1995, intends to buy all outstanding Class A and Class B common stock, not already beneficially owned by him.

Shares of Mediacom rose as much as 17 percent to trade at $6.24 in morning trade breaching Commisso's offer price.

"We believe $9 or $10 to be a much more defensible bid; however, we believe it is highly unlikely Commisso will be able to raise to these levels," Pivotal Research Group analyst Jeffrey Wlodarczak said in a note.

Miller Tabak & Co analyst David Joyce said, who has an $8 target on Mediacom stock, said it is worth "far more than that."

Joyce, however, does not see any rival bids in the offing.

"The chairman controls the company. It's pretty much up to him what happens," he said.

Commisso currently beneficially owns 87.2 percent of aggregate voting power of class A and class B shares of Mediacom, according to a filing with the U.S. Securities and Exchange Commission.

Commisso said he will continue in his current roles at Mediacom and is not interested in selling his stake in the company.

Mediacom, which targets smaller cities in the United States and caters to customers mainly in the Midwestern and Southeastern regions, had about 68.1 million shares of class A and B outstanding as of April 30.

The proposed transaction will not result in a change of control of existing debt arrangements, the company said.

For the first quarter ended March 31, Mediacom had total debt outstanding of $3.36 billion.

Commisso expects to finance the transaction through borrowings under the company's existing credit facilities.

"It appears at this level the company has the ability to comfortably fund the offer within its existing credit facility," Pivotal Research Group's Wlodarczak said.

The offer has just been received and no decision has been made with respect to Mediacom' response to the proposal, the company said. A special committee of independent directors has been formed to respond to Commisso's offer.

The company, which offers broadband products and services, has a market cap of $363.1 million, according to Thomson Reuters data.

Shares of Middletown, New York-based Mediacom were up 15 percent at $6.15 in late morning trade Tuesday on Nasdaq. (Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Don Sebastian)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article