Three minority shareholders of Fisher Communications Inc said a $373 million takeover bid by Sinclair Broadcast Group Inc undervalues the TV broadcaster and are looking to activist investor Mario Gabelli to derail the offer, Reuters reported.
(Reuters) – Three minority shareholders of Fisher Communications Inc said a $373 million takeover bid by Sinclair Broadcast Group Inc undervalues the TV broadcaster and are looking to activist investor Mario Gabelli to derail the offer.
Sinclair, which describes itself as the largest television broadcasting group in the United States, said in April it would buy Seattle-based Fisher for $41 a share in cash to expand its operations in the western United States.
For the deal to go through, about two-thirds of Fisher’s shareholders need to vote in favor at a meeting scheduled for Tuesday, August 6.
Three investors in Fisher, with a cumulative stake of more than 5 percent, said they believed Sinclair’s offer undervalued the company. They declined to be identified because of the sensitivity of the situation.
Despite opposing the offer, two of them said they would be unlikely to vote against it unless a larger shareholder were to push for a higher price.
That investor would probably need to be Mario Gabelli, whose 26.3 percent stake in Fisher as of March 31 made him the company’s biggest shareholder.
“We’d need somebody like him to do that for us to come (out) against it,” one of the minority shareholders said.
Gabelli’s Gamco Investors Inc bought Fisher shares in separate tranches last month, at time paying just above Sinclair’s offer price, according to SEC filings.
Gabelli told Reuters that his investment team was still divided on which way to vote. Some of his fund managers want a better price while others want to take the deal on offer.
“I will make the decision pretty soon,” he said. “If we vote against, we will file a 13D … probably no later than Monday.”
With acquisitions totaling about $2 billion in the last year, Baltimore-based Sinclair has been among the most active TV station buyers in a broadcasting industry boom.
Renewed interest in TV stations has been driven by revenue streams available from advertising and cable operators, who pay stations re-transmission fees to carry their channels.
“We are excited by Fisher’s standalone prospects. We believe Fisher would be valued significantly above $41 (a share) if the Sinclair deal is voted down,” a second investor told Reuters.
A fair distribution of the value created through a Fisher-Sinclair combination would be $48 a share, the shareholder said.
Gabelli, whose funds handle more than $30 billion in assets, has been pushing Fisher for about a year to consider a leveraged restructuring with funds borrowed from shareholders. (link.reuters.com/gef22v)
Fisher declined to comment and Sinclair was not immediately available for comment.
Fisher’s shares have risen 5 percent since the deal was announced, while Sinclair’s stock is up 27 percent.