Cablevision Enters Solo Bid for Adelphia Communications with $16.5 Billion Cash Offer

Strategic Insights -

Cablevision Systems has submitted a solo bid for Adelphia Communications, offering $16.5 billion in cash to acquire the company. This move pits Cablevision against its rival, Time Warner, which has partnered with Comcast to submit a bid worth $17.6 billion in cash and warrants for stock in a new company. Cablevision's bid is significant, as it would give the company a national presence with 8.4 million subscribers, making it a major player in the cable industry.

Key Takeaways:

  • Cablevision's bid for Adelphia Communications is worth $16.5 billion in cash.
  • The bid is heavily conditioned and could still be withdrawn.
  • Time Warner and Comcast have submitted a bid worth $17.6 billion in cash and warrants for stock in a new company.
  • Cablevision's bid is lower than Time Warner and Comcast's bid, but may be more appealing to Adelphia's directors and bondholders due to its all-cash offer.
  • Cablevision's management believes it can afford to pursue the bid by itself, even if it cannot reach an agreement with private equity partners Kohlberg Kravis Roberts and Providence Equity Partners.
  • Cablevision is receiving financing from J.P. Morgan Chase and Merrill Lynch.
  • Adelphia has systems in Los Angeles, upstate New York, and elsewhere, while Cablevision's systems are largely in New York's suburbs.
  • A deal would make Cablevision a national operator with 8.4 million subscribers.
  • Time Warner's chairman, Charles Dolan, is spearheading the Adelphia bidding process, and is in agreement with his son, James Dolan, on the bidding procedures.
  • Cablevision's chairman, Charles Dolan, has opposed efforts to have the company continue financing the satellite TV business Voom.

Statistics:

  • Cablevision's bid is worth $16.5 billion.
  • Time Warner and Comcast's bid is worth $17.6 billion in cash and warrants for stock in a new company.
  • Cablevision's market capitalization is $8.9 billion, with $11 billion in debt.
  • Adelphia has 8.4 million subscribers, while Time Warner has 10.9 million subscribers.
  • Cablevision's shares fell 19 cents to $27.83 a share, then dropped another 13 cents in after-hours trading as investors worried about additional debt.

Sources:

  • "Cablevision Moves to Buy Adelphia on Its Own"
  • Sanford C. Bernstein & Company, "Analysis: Cablevision's Bid for Adelphia"
  • The Wall Street Journal, "Cablevision Makes Solo Bid for Adelphia"