Terms of the deal
Cablevision (CVC) shareholders will receive $34.90 in cash. The transaction is expected to close by the end of the June 2016. It doesn’t appear from the merger agreement that Cablevision is permitted to pay its quarterly dividends during the pendency of the transaction. Here’s what you should know about the deal.
The deal needs to go through all the following steps before it can close:
- Cablevision shareholder vote (by written consent)
- Hart-Scott-Rodino Antitrust
- Committee for Foreign Investment in the United States (or CFIUS)
- FCC (U.S. Federal Communications Commission) approval
- Department of Homeland Security
- Department of Defense
- Any other state approvals (almost certainly New York, among others)
Cablevision has a non-solicitation agreement with a fiduciary out. This means if another suitor approaches Cablevision, the company can discuss a merger with that suitor if the board of directors thinks there’s a bona fide offer that would likely result in a higher bid for the company.
Note that Cablevision is controlled by the Dolan family, so the shareholder vote is really only family members agreeing to the merger after all regulatory approvals are in place. It doesn’t appear that there will be a proxy statement or a shareholder vote from minority shareholders.
Keep in mind regulatory approvals
The Cablevision deal is in a highly regulated industry. These deals typically take a very, very long time. The companies are guiding for a June 2016 close. And that’s probably an optimistic expectation. A typical utility deal takes 12–18 months. While this transaction isn’t a utility deal, the regulatory review will be more similar to a utility review than other transactions. You should remember that the process of vetting a transaction takes a while.
Note that the FCC review has a test as to whether the merger is in the public interest. There are other considerations here than simply market shares working. The FCC review can take 180 days. It has to allow public comments for a certain period of time. State reviews generally take the longest.
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