* CEO says terminated discussions with special board panel
* Says has no interest in selling his shares
* Shares drop as much as 20 pct
(Adds analyst comments, background, updates shares)
By Manasi Phadke
BANGALORE, Aug 31 Mediacom Communications Corp MCCC.O founder and chief executive withdrew his offer to take the cable television operator private after a special board committee rejected his sweetened bid.
Shares of the Middletown, New York-based company slumped as much as 20 percent to $5.50, below CEO Rocco Commisso's initial offer of $6 per share in May. [ID:nSGE6500FE]
Analysts said the board might have rejected the bid on valuation as it expects the stock price to appreciate on the back of increased cash flow due to recent cuts in capital expenditure.
Cable companies had cut back on capital expenditure to survive the prolonged downturn in the U.S. economy.
Gabelli & Co analyst Christopher Marangi said Commisso's offer for Mediacom was below other recent transactions and that the company was worth much more than $6 a share, or 6.6 times EBITDA.
In June, fifth-largest U.S. cable operator Cablevision Systems Corp CVC.N agreed to buy peer Bresnan Communications for $1.37 billion, which valued the company at 8.5 times EBITDA. [ID:nN14200736]
Marangi, who believes that Commisso will continue as the CEO despite the failed bid, said the possibility of another bid at some point in the future could not be ruled out.
Commisso, who founded Mediacom in 1995, currently has 87.2 percent of the voting power and owns about 40 percent of the total shares outstanding, according to the company's most recent regulatory filing.
The CEO said he terminated discussions with the special committee and reiterated that he does not intend to sell his Mediacom shares.
"I am very disappointed with the highly unusual process and ground rules established by the special committee and its financial and legal advisers to evaluate my proposal," Commisso said in a statement, without revealing his latest offer.
Mediacom competes with companies such as DirecTV Inc DTV.O and Dish Network Corp (DISH.O) in smaller cities in mid-west and south-east regions of United States.
The stock, which had gained 29 percent since Commisso made his offer public, was trading down 13 percent at $5.94 in afternoon trade, making it one of the top 10 percentage losers on Nasdaq. (Reporting by Manasi Phadke in Bangalore; Editing by Unnikrishnan Nair)