Most LBO’s these days get killed because buyers develop remorse over a high price and the tough borrowing environment. At Cablevision (CVC) all of that has been turned on its head. The founding Dolan family desperately wants to buy the company for $10.6 billion. The company’s largest shareholders think the price is way too cheap.
ClearBridge Advisors, the largest institutional shareholder in Cablevision, says it will vote against the buy-out. According to The Wall Street Journal, it holds 14% of the public shares in the cable company. Uber-fund manager Mario Gabelli’s firm is voting "no". So is T Rowe Price. That brings the votes against to about 35% and these firms will likely enlist other institutions to get that total higher.
The Dolans are offering just over $36 a share for the company. Gabelli claims that the firm is worth North of $50.
To make matters worse for the founding Dolan family which is leading the LBO, independent outsiders have come out against the deal. The Journal writes a negative view of the purchase has been taken by ISS Governance Services, one of the leading proxy advisory firms to institutional investors which last week recommended that shareholders vote against the buyout because the price is inadequate. Also, Proxy Governance Inc., a proxy advisory firm, recommended yesterday that shareholders reject the offer.
The strange thing about all of this is that anyone wants Cablevision at all, at least at these prices. Stocks in Comcast (CMCSA) and Time Warner Cable (TWC) have been pounded like red-headed mules as the TV and broadband competition threat from Verizon (VZ) and AT&T (T) have taken the cable co shares to 52-week lows. Comcast, in the competitive market around New York City, is more likely to be attacked by the telephone guys because it has such a fertile territory of customers.
Cablevision shareholders must not be watching the stock prices of the company’s peers.
Douglas A. McIntyre