Cox Communications, Inc., 1999
Executive Memo
Cox Communications, Inc., 1999
Introduction:
Mr. Clement, congratulations on this opportunity to strengthen Cox’s place in the cable market. The Gannett acquisition will certainly benefit Cox and its shareholders. We at Professional Consulting Group (PCG) realize that you face a difficult decision working this new purchase into your existing plans for the next six months. With the proper funding plan, whether it be issuing debt, equity, or equity-linked securities, we are confident that the Cox family can maintain its majority ownership, while not endangering the company’s investment grade debt rating.
PCG understands the current financial situation of Cox and its competitors as well as the changing market conditions that could affect funding for the Gannett acquisition. Based on our comprehensive review we feel that our recommendation will place Cox in a leading position for future growth and consistent profits.
Recommendation:
Cox has set an assertive growth goal of doubling in size every five years while preserving the family’s majority economic ownership. Cox currently has a strong balance sheet which allows aggressive pursuit of several acquisitions, including the Gannett purchase.
Our recommendation is to purchase Gannett by issuing equity in form of Class A common stock. To raise $2.7 billion, this will amount to 81 million shares at $33.33 per share (See Exhibit 4).
Rationale:
With the acquisitions Cox already committed to and the addition of Gannett Co., Cox would need $10.52 billion in gross funding, but Cox subscriber base would grow by over 60% in just 1 year. The additional acquisition of Gannett’s cable properties for $2.7 billion will fit in well with Cox’s own strategy of concentrating subscribers in geographical areas to achieve economies of scale and scope.
Mr. Clement, our recommendation to acquire Gannett strictly through
Cox Communications, Inc., 1999
Introduction:
Mr. Clement, congratulations on this opportunity to strengthen Cox’s place in the cable market. The Gannett acquisition will certainly benefit Cox and its shareholders. We at Professional Consulting Group (PCG) realize that you face a difficult decision working this new purchase into your existing plans for the next six months. With the proper funding plan, whether it be issuing debt, equity, or equity-linked securities, we are confident that the Cox family can maintain its majority ownership, while not endangering the company’s investment grade debt rating.
PCG understands the current financial situation of Cox and its competitors as well as the changing market conditions that could affect funding for the Gannett acquisition. Based on our comprehensive review we feel that our recommendation will place Cox in a leading position for future growth and consistent profits.
Recommendation:
Cox has set an assertive growth goal of doubling in size every five years while preserving the family’s majority economic ownership. Cox currently has a strong balance sheet which allows aggressive pursuit of several acquisitions, including the Gannett purchase.
Our recommendation is to purchase Gannett by issuing equity in form of Class A common stock. To raise $2.7 billion, this will amount to 81 million shares at $33.33 per share (See Exhibit 4).
Rationale:
With the acquisitions Cox already committed to and the addition of Gannett Co., Cox would need $10.52 billion in gross funding, but Cox subscriber base would grow by over 60% in just 1 year. The additional acquisition of Gannett’s cable properties for $2.7 billion will fit in well with Cox’s own strategy of concentrating subscribers in geographical areas to achieve economies of scale and scope.
Mr. Clement, our recommendation to acquire Gannett strictly through