Mediacom Founder and Chairman Rocco Commisso has put in a bid for his own company. He is proposing taking the mid-sized cable operator private at $6 per share, or about a 12.6% premium to Friday's closing stock price, according to Sanford Bernstein analyst Craig Moffett.
That came in a non-binding proposal to the board announced June 1. It has created a special committee to consider the proposal.
Moffet pointed out Tuesday that Mediacom will be following in the footsteps of Cox and Insight, which went private in 2004 and 2008, respectively. "A combination of low capital intensity, and therefore high free cash flow, and access to very low rates in the debt markets has translated into a limited need for access to public equity markets for U.S. cable operators," sais Moffett an advisory.
He said the company's valuation appeared too low for Commisso to resist. Mediacom was not commenting on the bid beyond a release pointing out there was no guarantee of any outcome.
Moffett says that the $6 offer is a "relatively small price to pay," figuring that it is only about $30 million above market price for Commisso, who owns about 40% of the company and an 87% voting interest, to pick up the rest of his stock.
Moffet says banks willingness to finance the deal is notable, given Mediacom's ratio of debt to EBITDA (earnings before interest, taxes, depreciation and amortization) of 6x, compared to Comcast's 2x, for example, or Time Warner Cable's 4.5x.
Mediacom has about 1.3 million video subs, according to the National Cable & Telecommunications Association.