Cable giant proposes $7.9 billion buyout

Monday, Aug. 2, 2004 | 10:57 a.m.

BLOOMBERG NEWS

ATLANTA -- Cox Enterprises Inc. today offered $7.9 billion for the 38 percent it doesn't already own in Cox Communications Inc., a transaction that would take the fourth-largest U.S. cable-television company private.

Cox is the dominant cable television provider in the Las Vegas Valley and has more than 1,100 local employees. The Greenspun family, owner of the Las Vegas Sun, is a minority investor in Cox Communications.

Cox Communications shareholders would get $32 in cash for each share, 16 percent more than the closing price on Friday, Atlanta-based Cox Enterprises said in a statement. Cox Communications shares rose 21 percent, or $5.72, to $33.30 at 9:32 a.m. in New York Stock Exchange composite trading.

The shares had fallen 20 percent this year with that of other cable operators including Comcast Corp. amid investor concern about competition from satellite-TV operators. Cox family members who control the company may want to take it private because they consider the shares undervalued, said Todd Mitchell, an analyst with New York-based Blaylock & Partners LP.

"They have thought they could run the company more efficiently if it was private," said Mitchell, who rates Cox "hold" and doesn't own the shares. "They wouldn't need to telegraph strategy to shareholders."

Local officials for Cox Communications declined to comment on the proposal. Bob Jimenez, a spokesman for Cox Enterprises in Atlanta, said the operation of local cable systems should be unaffected as the buyout process moves forward. The addition of new services -- including the possible rollout of Voice-over Internet telephone service in Las Vegas -- should not be delayed.

"There should be no impact on the day-to-day operations," Jimenez said.

Cox Enterprises owns 62 percent of the cable operator's Class A shares and 74 percent of its voting rights, according to a Securities and Exchange Commission filing.

Barbara Cox Anthony and Anne Cox Chambers control Cox Enterprises and were ranked 23rd on Forbes magazine's list of the world's richest people with a net worth of $11.2 billion each. The women are the mother and aunt, respectively, of Cox Enterprises Chief Executive James Kennedy. Kennedy is the grandson of the company's founder.

Microsoft Corp. Chairman Bill Gates owns 5.7 percent of the company's Class A shares through his investment company and the Bill & Melinda Gates Foundation, the filings show.

Cox Communications vies with satellite operators including DirecTV Group Inc. and phone companies such as SBC Communications Inc. in offering television, high-speed Internet access and phone services.

"An increasingly competitive environment convinces us that future investments in the cable industry are best made through a private structure," said Kennedy in the statement.

Cox Enterprises, whose other subsidiaries include Cox Radio Inc. and Cox Newspapers Inc., expects Cox Communications' board to form a special committee of independent directors to consider the proposal. Citigroup Inc. and Lehman Brothers Holdings Inc. have agreed to provide as much as $10 billion in funding for the transaction and to refinance debt, Cox Enterprises said.

Sun business writer

Kevin Rademacher contributed to this report.