2 McCaw Deals Seen as Moves to Support LIN Takeover Offer : Firm Bids for N.Y. Cellular Franchise, Sells in Southeast
McCaw Cellular Communications today announced two billion-dollar transactions that an analyst said are apparent moves in support of its bid to take over LIN Broadcasting Corp.
McCaw, the nation’s No. 1 cellular company, said it has signed a definitive agreement to acquire the interest of Metromedia Co. in the New York City non-wireline cellular franchise for $1.9 billion in cash, subject to a 45-day right of first refusal held by LIN.
Meanwhile, it has signed a similar agreement to sell its cellular interests in three Southeastern states to Contel Cellular Inc., a subsidiary of Contel Corp., for $1.3 billion in cash, subject to closing price adjustments.
Tender Offer Extended
McCaw’s $110-per-share unsolicited tender offer for LIN has been extended to Oct. 13 despite an arrangement in which LIN is combining its cellular operations with one of the regional Baby Bells.
In the Metromedia transaction, McCaw would acquire a 50% voting interest and a 45.67% equity interest in the New York City franchise. LIN owns a 50% voting interest and a 45% equity interest.
Analyst Alvin Mirman of Gruntal & Co. said today’s announcements were further maneuvers in the “war” between the two companies.
“The (Metromedia) deal is a delaying tactic for McCaw,” Mirman said. “In all probability LIN will acquire Metromedia’s interest.”
On Sept. 21 McCaw said about 8.1 million shares of LIN stock have been tendered since the offer was first announced June 6. That is still well short of the approximately 53.9 million outstanding shares of LIN, however. When McCaw began its tender offer, it owned 5.1 million shares of LIN.
But analysts have said McCaw will probably have to raise its offer to entice LIN shareholders because of an agreement announced Sept. 11 between LIN and Bell South Corp., based in Atlanta.
“The (Contel) sale is a strategic move to build up its (McCaw’s) war chest to make a higher bid for LIN,” Mirman said.
The combination of LIN and Bell South Corp.’s cellular telephone divisions would create a new company that would be the second-largest cellular concern in the country behind McCaw.
The company will have about 46 million “pops,” or potential cellular customers in metropolitan areas around the country. McCaw has about 50 million pops.
The Contel transaction includes McCaw’s interests in 13 markets in Alabama, Kentucky and Tennessee.
McCaw said it would maintain a cooperative marketing relationship with Contel.
