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Cablevision Systems Corporation (CVC)
$22B Management-Led Buyout
Summary
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 Increased
offer from Dolan family is finally accepted
- $36.26 per CVC share; $22B enterprise value
- Dolan family has 22.5% of common equity,
but 74.0%
of the vote
- By virtue of owning 100% of ten vote Class B
stock
- Stock ownership table
- Deal will be subject to approval of a majority of
public shareholders (Merger Agreement §3.11)
Announced
5.02.07
Dolan
family had made several prior offers,
which were rejected by CVC's special committee
- Would have paid $21 per share, after spin-off of
media properties to all holders
- Assumed total value of $33.50 per share
- See Failed Dolan Proposal 2005
below
- April 2006 special dividend
- CVC pays a $10 per share special dividend
- $3B in total
- See Special Dividend
below
- Dolan family offers $27 per share in October 2006
Developments
- CVC elects two outside lawyers to be directors
- Will both serve on new special litigation
committee
- Form 8-K
10.27.06
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Advisors
Merger Agreement
 General
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Article I The Merger
- 1.01 The Merger
- 1.02 Closing
- 1.03 Effects
of the Merger
- 1.04 Certificate
of Incorporation and By-laws
- 1.05 Directors
- 1.06 Officers
- 1.07 Conversion
of Shares
- 1.08 Stock Options
and Restricted Stock
- 1.09 Stockholders Meeting; Proxy Materials
and Other Sec
Filings
- 1.10 Further Assurances
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Article II Dissenting Shares; Payment For Shares
- 2.01 Dissenting Shares
- 2.02 Payment Fund
- 2.03 Stock Transfer Books
- 2.04 Section 16 Matters
- 2.05 Adjustments
to Prevent Dilution
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Article III Company Reps
- 3.01 Corporate Organization
- 3.02 Capitalization
- 3.03 Authority
Relative to Agreement, Ancillary Agreements
- 3.04 No Conflict; Required Filings
and Consents
- 3.05 Sec Filings
and Financial Statements
- 3.06 Taxes
- 3.07 Restricted Payment Capacity
- 3.08 Employee Benefit Plans
and Related Matters; ERISA
- 3.09 Franchise Renewal Rights
- 3.10 Absence
of Undisclosed Liabilities
- 3.11 Stockholder Approval
- 3.12 Opinion
of Financial Advisors
- 3.13 Brokers
- 3.14 No Other Representations
or Warranties
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Article IV Family LLC Reps
- 4.01 Organization
- 4.02 Authority
Relative to Agreement, Ancillary Agreements
- 4.03 No Conflict; Required Filings
and Consents
- 4.04 Financing
- 4.05 Exchange Agreement; Guarantee
- 4.06 No Material Transactions
- 4.07 Subsidiaries
- 4.08 Brokers
- 4.09 No Other Representations
or Warranties
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Article V Covenants and Other Agreements
- 5.01 Conduct
of Business of the Company
- 5.02 Notification
of Certain Matters
- 5.03 Indemnification;
Directors and Officers Insurance
- 5.04 Access
and Information
- 5.05 Publicity
- 5.06 Reasonable Best Efforts; Financing
- 5.07 No Solicitation
- 5.08 Stockholder Litigation
- 5.09 Solvency Opinion
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Article VI Conditions
- 6.01 Each
Party
- 6.02 Family LLC
and CYC Mergerco
- 6.03 Company
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Article VII Termination, Amendment and Waiver
- 7.01 Termination
- 7.02 Effect
of Termination
- 7.03 Expenses
- 7.04 Amendment; Company Action
- 7.05 Extension
and Waiver
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Article VIII Miscellaneous
- 8.01 Non-survival
of Representations, Warranties and
Agreements
- 8.02 Notices
- 8.03 Governing Law; Jurisdiction
- 8.04 Entire Agreement; Assignment
- 8.05 Severability
- 8.06 Headings
- 8.07 Parties
in Interest
- 8.08 Remedies
- 8.09 Counterparts
- 8.10 Waiver
of Jury Trial
- 8.11 Definitions
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Other Agreements
SEC_CODE_REF_0090001192884
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Agreements
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SEC Filings
Failed Dolan Proposal - 2005
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Dolan
family made proposal to Cablevision in June 2005
- Would have taken sixth largest cable operator private
- $21.00 per share paid to public stockholders
- $4,377 per subscriber
- After spin-off of Rainbow Media
Holdings
to all holders
- Cable networks including AMC, IFC and WE
- Knicks and Rangers
- Madison Square Garden and Radio City Music Hall
- Assumed value of spin-off was $12.50 per share
- Assumed total per share of $33.50
- $7.9 billion equity value; $13.6 billion
enterprise value
- 25%-27% premium to then recent trading prices
- Dolans' would
have owned 100% of Cablevision -
20% of
Rainbow
- Founder Charles Dolan would have led Cablevision
- Son James Dolan would have been CEO
of publicly-held
Rainbow
Proposal
announced
6.20.05
Proposal
withdrawn 10.24.05
Advisors
- Dolans: Merrill Lynch / Banc of America / Debevoise
- Special committee: Lehman / Morgan Stanley / Willkie Farr
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$3B Special Dividend - April 2006
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Cablevision
pays a $ 3B special dividend
- Follows controlling Dolan family abandoning their
plans
to split-up company and take cable business private
- Plan for $3B special dividend was put on hold
after discovery of financial covenant violations
- After
compliance review, plan was reconsidered
- To
settle shareholder lawsuits, special committee will be used to review the
special dividend
- Funds dividend with additional $3.5B in
borrowings
- $10 per share special dividend declared
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Rejected Dolan Proposals 2006
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Offer
by controlling Dolan family
- Initial offer is at $27 per share
- Family has 22.5% of common equity, but 74.0% of the vote
Initial
offer announced
10.09.06
- Merrill Lynch - Bear Stearns
- Includes details on planned financing
Offer
increased to $30 per share
- Merrill Lynch - Bear Stearns
- Includes details on planned financing
Rejected
by special committee as inadequate
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Proxy Solicitation
Deal Protection
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No
shop covenant
Break-up
fee
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Regulatory Approvals
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HSR
Act
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Fairness Opinion
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Lehman
Brothers fairness opinion
Morgan
Stanley fairness opinion
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Related Topics
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