Updated from 10:54 a.m. EDT
renewed going-private plans gave its shares a lift Monday, as the Dolan family, which controls the Bethpage, N.Y., cable giant, offered to buy out its public stockholders.
The Dolans say they will pay $27 a share for the stake. The offer is a 17% premium over the stock's average range in the past two weeks and values the company at about $7.9 billion.
Shares of Cablevision surged $2.57, or 11%, to $26.42 Monday on trading volume that was much heavier than normal.
To finance the deal, the Dolan family says it will put its 22% interest, or about $1.7 billion worth of stock, into the transaction. Through the equity stake, refinancing and additional loans, the Dolans expect to lay out about $10.9 billion in cash to make the deal.
Late Monday, Cablevision issued a statement saying that its board has formed a special committee to evaulate the proposal. The committee, which plans to proceed in a "deliberate and timely manner," hired legal counsel and also plans to retain financial advisers to assist in the review.
In June 2005, the Dolans floated their first $7.9 billion take-private plan, which was later sunk by the board. That deal promised to pay stakeholders $21 a share in cash and spin off its media and entertainment properties into a separately traded Rainbow Media venture. The price represented a 24% premium for Cablevision holders.
The Dolans have gained a reputation for their somewhat
dysfunctional leadership. The highlights include an off-then-on-again go-private plan and, an off-then-on-again special $3 billion dividend that eventually put more than $600 million in the family's pockets in April.
Last month, the company revealed that it had backdated some of its options, including a grant to a dead former executive. The company added that it received a grand jury subpoena seeking information about its stock option practices.
Cablevision also said, in the wake of the options backdating scandal, that it restated its financials going back to last year and that two audit committee members have resigned.
But despite the distractions, the company reported last month that the cable business is moving along fine. The second-quarter $26 million loss was less than Wall Street anticipated, and subscriber growth, particularly with broadband and phone services, was strong.
Cablevision's shares are up 24% since April when the company made its $3 billion dividend payment.