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Attempt to Absorb Broadcaster Seen As Undervalued
Less than a week after Hearst Corp. launched a $600 million cash tender offer for the remaining 27% of Hearst-Argyle Television it doesn't already own, some investors are urging Hearst-Argyle to reject the deal.
Hearst already owns 52% of the outstanding stock of Hearst-Argyle, and with its 100% ownership of its super-voting Class-B shares, controls about 73% of Hearst-Argyle's equity and general voting power. The $23.50-per-share offer represents a 15% premium to Hearst-Argyle's Aug. 23 share price of $20.46 each. If the deal is completed, Hearst-Argyle would become a wholly-owned subsidiary of Hearst Corp.
Last Tuesday, Marathon Partners, a New York investment company that owns about 90,000 shares of Hearst-Argyle, sent a lengthy letter to the television-station owner's board of directors, outlining the inadequacy of the Hearst Corp. offer.
"It is absolutely clear that the current offer does not fairly compensate the shareholders of HTV for the unique and valuable assets the company controls," Marathon Partners managing member Mario Cibelli wrote in the letter. "I strongly urge you to reject the $23.50 offer outright. From my viewpoint, this is a highly opportunistic move by Hearst Corp. that offers no compelling call to action for HTV owners. It is obvious to me that any true fiduciary would find Hearst Corp.'s offer unacceptably low."
At a...