Washington Redskins owner Jack Kent Cooke said yesterday he plans to make a hostile cash tender offer of $70.01 a share for control of Multimedia Corp., the South Carolina-based communications company that produces and syndicates "The Phil Donahue Show."
Cooke said he intends to bypass the company's board of directors by taking his billion-dollar offer directly to Multimedia's stockholders later this week, once papers describing his bid are filed with the Securities and Exchange Commission. Multimedia's board of directors, which has rejected at least three takeover bids recently, including a $65-a-share offer from Cooke, is trying to proceed with its own buyout plan, worth about $55 a share.
Cooke said he will offer $70 a share in cash for 6.73 million Multimedia shares. That amounts to about 40.3 percent of the company's outstanding shares and enough to give him a majority, since he already controls 1.63 million shares, or about 10 percent of the company. The wealthy Virginia businessman said that following completion of the tender offer, he plans to exchange $70.01 a share in cash and securities for the rest of Multimedia's shares.
While hostile tender offers are not unusual, bidders traditionally have refrained from going after media companies because of lengthy regulatory delays. But on Friday, the Federal Communications Commission allowed Cooke to proceed with his hostile takeover bid by approving the use of a novel takeover technique.
The unprecedented FCC action allowed Cooke to proceed with his hostile bid by appointing a trustee to hold tendered stock until Cooke receives or fails to receive final FCC approval. The advantage of the approach is that Cooke does not have to wait until he receives final FCC approval to proceed with his offer. Instead, he can move forward under interim approval. Final FCC approval to transfer the broadcast licenses held by Multimedia takes a minimum of 45 days from the time of application.
Cooke faces several obstacles in his bid to acquire Multimedia. Members of the Peace, Jolley, Furman and Sisk families are part of a group that controls more than 42 percent of the company's common stock and that has pledged its support to the company's previously announced recapitalization plan. However, it is possible that Cooke's new offer may be lucrative enough to divide family members.
Another obstacle is a South Carolina law that requires that mergers be approved by holders of at least two-thirds of a company's outstanding stock. It could be difficult for him to get two-thirds approval if company insiders continue to reject his attempt to gain control of the company. In addition, the company has signed agreements with several Wall Street arbitrageurs who have agreed to vote their shares with management in exchange for additional compensation. However, many of those agreements included provisions that allowed the arbitrageurs to back out if a superior public bid for the company was announced. Cooke, who already holds about 10 percent of Multimedia, made his offer for $70.01 a share rather than just $70 because some of Multimedia's agreements with arbitrageurs specified that they could be terminated if a public bid for the company was announced in excess of $70 a share.