Posted by: Jon Fine on August 24, 2007
(The following post would not exist without my colleague Tom Lowry, who picked up on all this stuff while I was at work on my next column.)
The Hearst Corporation is offering $23.50 for the 27% of Hearst Argyle Television it does not own in a bid to take it private.
In a letter to the board, Hearst Corp. CEO Vic Ganzi says this:
“We believe our offer is fair to public stockholders of Hearst-Argyle. This offer represents a premium of approximately 15% over the closing price of the shares of Series A Common Stock on August 23, 2007 as well as the average closing price for the last four weeks.”
All of which is technically true! But a simple look at the stock history shows that just three months ago Hearst Argyle was trading just under $27 a share. And it hit $28 per share as recently as mid-April.
Now: The top institutional shareholder of Hearst-Argyle? It’s Bruce Sherman’s Private Capital Management. (Yes, the same guy whose impatience with Knight Ridder’s inability to budge the stock put it into play.)
Does Bruce Sherman seem like the kind of guy who will accept four bucks per share below what the stock price was just a few months back?
More deliciousness: This is the first major deal I can think of in which the company is invoking recent market gyrations as a reason to do the deal. From Ganzi’s letter:
“Recent events in the capital markets have placed a meaningful premium on liquidity, and we believe the offer is fair to Hearst-Argyle’s public stockholders because, among other things, it provides immediate liquidity at an attractive premium to market.”
Hearst-Argyle’s stock price shot up in wake of Hearst’s announcement and closed over $25.
The media pod at BusinessWeek is—ahem—looking forward to hearing what the shareholder reaction will be.