Cox sisters bid to take back Cox Communications

The Cox family told Wall Street today that they want their cable company back. Cox Enterprises, the media conglomerate controlled by sisters Barbara Cox Anthony and Anne Cox Chambers, made an official bid to buy up the 38% of Cox Communications that is publicly traded.

Before the markets opened today, Cox Enterprises proposed paying $32 in cash for each outstanding share of Cox Communications, a 16% premium over Friday’s closing price and a total investment of $7.9 billion. The market this morning, however, quickly pushed Cox Communications’ share price up as high as 23%, but Cox Enterprises made no move to adjust its offer.

"Our proposal represents an excellent opportunity for CCI [Cox Communications, Inc.] shareholders, giving them the ability to receive a meaningful premium to recent trading values," said Cox Enterprises CEO and chairman James Kennedy in a statement. "For CEI [Cox Enterprises, Inc.], this is chance to make a substantial additional investment in an asset we know well. An increasingly competitive environment convinces us that future investments in the cable industry are best made through a private company structure."

In a separate statement issued today Cox Communications said it has received Cox Communications’ proposal and has appointed a special committee of independent directors (those unaffiliated with the parent company) to review it.

Cox Communications, along with Comcast and Time Warner last week, reported declines in basic cable subscribers, facing increasing pressure from the digital broadcast satellite companies and the RBOCs, many of whom have partnered with DBS providers for bundled telecom-video service. Stock prices across the cable sector have been reeling for the last six months because of those competitive pressures, but many analysts have also pointed to the Adelphia controversy as having unfairly affecting the other MSOs. All of these factors may have contributed to Cox Enterprises’ decision to attempt a buyback of its subsidiary. Even though control of the company is a moot point since the Cox Enterprises owns a majority stake and a majority of the board, becoming a wholly owned subsidiary of the privately held media conglomerate would excuse the cable company from answering to Wall Street.

Cox Enterprises is retaining Lehman Brothers and Citigroup Global Markets as its financial advisors and is setting aside $10 billion to pay for the cost of the proposed acquisition, related expenses and the refinancing of the group’s existing debt.