NEW YORK (The Deal) -- Cablevision Systems (CVC) has reached a 52-week high since Altice's Patrick Drahi offered to buy the metro New York cable and broadband provider for $17.7 billion, including debt.
Drahi's payout comes to $34.90 per share, which is more than 22% above its close before Altice disclosed its bid last Thursday.
Superficially, at least, it could appear that Drahi is picking up Cablevision at a discount to the $36.26 per share that the family of James and Charles Dolan offered for the company in May 2007.
The Dolans' bid, which shareholders rejected on the eve of the recession, was for a much different company that included Madison Square Garden and Radio City Music Hall; the AMC and IFC cable networks; the New York Knicks and other sports, media and entertainment properties. Though Cablevision stock declined along with the broader markets during the financial collapse, shareholders have been able to recoup value through dividend payments and the spin offs of Madison Square Garden (MSG - Get Report) and AMC Networks (AMCX - Get Report) .
Counting the Altice shares, dividends and the prorated value of the Madison Square Garden and AMC stocks, a Cablevision shareholder who stuck around since the Dolans' last offer would have collected more than double the $36.26 bid in stock and cash, without counting interest on cash distributions or increased equity from reinvested dividends.
The Dolans first offered to take Cablevision private in June 2005, offering $21 per share in cash and a share in an entity holding Madison Square Garden, the New York Knicks and Rangers, the Independent Film Channel and American Movie Classics. The share in the entertainment stub would be worth $12.50 per share.
With a tepid response, the family withdrew the bid in October 2005 and paid a $3 billion special dividend that came to $10 per share.
The Dolans tried $27 per share a year later. The family increased the bid to $30 per share in January 2007 and $36.26 per share in May.
Shareholders rejected the Dolans in October 2007, concerned that the controlling family was fleecing minority holders despite the increased bids.
The stock fell to the $20s after the rejection and traded as low as $11 in late 2008. In 2011, the stock reached the $30s.
The company has paid $3.75 in dividends since shareholders rejected the Dolans' final offer, not counting that 2006 special dividend of $10 per share.
Cablevision also spun off Madison Square Garden in February 2010. Shareholders received one share of the sports and entertainment group for each share of Cablevision.
The company spun off AMC Networks in June 2011, giving investors one share of the cable network group for every four shares of Cablevision.
On Monday afternoon, Madison Square Garden traded at $75.22 while the market priced AMC at $75.58.
Prorating for the terms of the spinoffs, Cablevision shareholders would have had $18.80 in MSG equity value and $18.90 in AMC equity value per share of the parent.
With Drahi's $34.90 offer, the $3.75 per share in dividends, and the combined, prorated $37.70 of MSG and AMC equity, a Cablevision shareholder who had held the stock since the Dolans' last offer would have $76.35 in cash and various equities -- not accounting for any interest on the dividend payments the company has made since 2008.
Soon, our hypothetical shareholder will have another equity that could be traced back to the old Cablevision. Madison Square Garden is breaking off its media networks from its sports teams on Sept. 30.
When the economy tanked in 2007 and 2008, many Cablevision shareholders likely regretted passing up the Dolans' cash. While it has taken patience, they are now more than even.