Hearst Offers $600 Mil to Buy Out Argyle

Aug 27, 2007  •  Post A Comment

Hearst Corp. is going to offer about $600 million to purchase the 27 percent minority stake in Hearst-Argyle Television that it does not already own.
The offer, announced late Friday afternoon, adds up to $23.50 per share, a 15 percent premium compared to the Thursday closing price of $20.46 per share.
Based on 94.3 million shares outstanding at the end of June, the Hearst offer values the company at $2.21 billion.
Hearst-Argyle stock opened trading Monday on the New York Stock Exchange at $24.86 per share, down 36 cents or 1.43 percent, from Friday’s close of $25.22.
In its quarterly earnings call July 26, Hearst-Argyle President-CEO David Barrett expressed confidence that the company, which owns 26 TV stations and operates three others that combined reach about 18 percent of U.S. TV homes, would show “value creation for our shareholders.”
The move to privatization is not unexpected. In April, Bear Stearns had tagged Hearst-Argyle as a candidate for “corporate parent take-outs.”
Bear Stearns analyst Victor Miller on Monday suggested the Hearst-Argyle move would provide a lift for the stocks of some TV groups, including NexStar, that have put themselves up for sale.
“However, the real issue is whether investors believe there is a significant change in the industry take-out multiples given the disruption in the credit markets and whether the majority of the outstanding shares will vote for the $23.50 offer price,” Mr. Miller said in a note distributed Monday.
Hearst also owns newspapers, including the Houston Chronicle and San Francisco Chronicle, and magazines ranging from Seventeen to Cosmopolitan to Esquire.
In Monday afternoon trading Hearst-Argyle shares added $2.09, or 10.2 percent, to $22.55. The stock has ranged from $18.70 to $28.16 over the past year.
(Editor: Horowitz)

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