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Investors eager for hot technology stocks are likely to bid up shares of Teleport Communications Group's imminent initial public offering--even though they'll have no say in the management of the company.
At the end of this month, Teleport's cable company owners, Cox Communications Inc., Comcast Corp., Tele-Communications Inc. and Continental Cablevision Inc., are expected to sell 15% of the business to outside investors for an estimated $376 million.
In the skewed structure of the deal, the investors will receive less than 2% of the voting rights, leaving them with no leverage with management and no voice in a future takeover.
So far, investors don't seem to care.
"The new-issues market has been so hot that (lack of voting rights) has not been a deterrent," says Robert Natale, editor of Standard & Poor's Emerging and Special Situations Report.
These days, it's not unusual for media and cable companies, especially those with a history of family ownership, to keep control even as they cash in on a public offering. If an offering is hot, they can get away with it.
But over time, the lack of voting rights could hurt investors if Staten Island-based Teleport becomes a...