Storer Receives Bid From Cable TV Operator

Storer Communications, which agreed three months ago to merge with a unit of the investment firm of Kohlberg, Kravis, Roberts, on Tuesday received a competing bid from Comcast, a smaller but cash-rich cable-TV operator based in Bala Cynwyd, Pa.

The new offer is valued at about $97 per share, or nearly $10 higher than the Kohlberg, Kravis proposal.

Analysts and several large shareholders greeted the new bid with enthusiasm, because the bidding war they had predicted for Miami-based Storer has been slow to materialize.

“It took a long time, but we finally got one,” said Paul Kagan, a Carmel-based industry consultant who owns several thousand shares of Storer stock. Storer, owner of seven TV stations reaching about 9% of the nation’s TV households, became a takeover target in recent years when it reported losses and incurred considerable debt to become the nation’s fifth-largest cable-TV operator.

Comcast said it will offer $82 a share in cash, plus 1.2 shares of preferred stock and 1.2 warrants to purchase stock in the surviving company. In a telephone interview, Comcast Chief Financial Officer Julian Brodsky said the bid was designed to offer Storer shareholders a premium of $7 in cash and 20% more in securities than the bid put forth by Kohlberg, Kravis, which specializes in taking companies private.

Plans to Sell Stations

If successful, Comcast plans to sell Storer’s TV stations but operate its cable holdings, Brodsky said. Brodsky said Comcast is prepared to invest $200 million of its own cash, in addition to $900 million from a syndicate led by the company’s longtime lender, Bank of Montreal, and $1.2 billion in commitments from Merrill Lynch.

Kagan and several portfolio managers expressed hope Tuesday that the Comcast move might prompt Kohlberg, Kravis to increase its bid, which consists of $75 in cash and notes and warrants valued at about $12.50.

“KKR now has to do something, either up the (bid) or drop it . . . or make a cash tender (offer),” said Mario Gabelli, the chief investment officer of New York-based Gamco Investors, which owns 330,000 shares of Storer common and about 35,000 warrants.

Under the terms of the deal announced last spring, Kohlberg, Kravis could receive a fee of about $21 million if another party gains more than 15% of Storer’s stock or if the merger collapses under certain other circumstances.

Thomas Daly Jr., a public relations consultant for Kohlberg, Kravis, said he couldn’t comment on whether his client may sweeten its bid, but said he believes that the next move will be up to the Storer board, which signed a definitive merger agreement with Kohlberg, Kravis last May.

Andy Holdgate, Storer’s director of public relations, said that the company had been notified of the new offer but added that “there is no board meeting scheduled. We will not announce when one is scheduled, if one is scheduled.”

Storer’s shares closed Tuesday on the New York Stock Exchange at $84, up $1.75 at a 12-month high.