Cable Operators

Cox Accepts Parent’s Buyout Offer

10/19/2004 7:52 AM Eastern

Cox Communications Inc. has accepted an $8.5 billion buyout offer from its parent company, Cox Enterprises Inc. -- a move that will take the Atlanta-based MSO private and officially out of the running for any of the assets of Adelphia Communications Corp.

Cox Communications had been speculated as a possible bidder for at least some of Adelphia’s 5.2 million subscribers. However, in light of the most recent deal, that is no longer the case, Cox spokeswoman Ellen East said in an interview.

“We will not be looking to acquire any assets at this point,” East said.

Cox Communications said Tuesday that it had accepted the buyout offer from CEI, for $34.75 per share. The MSO expects to begin a cash tender offer for its shares in two weeks, followed by a merger.

After the tender offer is commenced, shareholders will have 20 business days to participate. Cox needs about 90% participation to effect a short-form merger agreement.

CEI first announced its intention to buy the 38% of Cox Communications’ outstanding shares it didn’t already own in August. That deal was for $32 per share ($7.9 billion) and, at the time, it represented a 16% premium to Cox Communications’ share price of $27.58 each.

However, news of the offer sent the stock soaring -- it went as high as $33.47 each -- and the shares continued to maintain that level even as CEI gave no indication that it would raise its offer.

Even though Cox Communications stock continued to rise Tuesday -- it closed at $34.39 per share, up 95 cents each and close to the amended offering price -- representatives of CEI said the price will not be changed again.

Citigroup Global Markets and Lehman Bros. Inc. are serving as CEI's exclusive financial advisors in this transaction. The Goldman Sachs Group Inc. is serving as exclusive financial advisor to CEI’s special committee.

Citigroup, Lehman and J.P. Morgan Chase & Co. have committed to provide $10 billion to fund the transaction, to pay related fees and expenses and to provide CEI and Cox Communications with additional liquidity.

Some analysts have speculated that Cox Communications would have to sell some assets to help lessen the financial blow of the buyout, naming its 25% interest in Discovery Communications Inc. as a possible sale candidate. Analysts have valued Cox’s Discovery stake at about $3 billion.

CEI spokesman Bob Jimenez said no asset sales are planned at this stage. “At this time, we don’t have any plans to dispose of any assets,” he added.

September