BETting on the private sector: Bob Johnson's offer to buy outstanding stock meets shareholder resistance.Bob Johnson's offer to buy outstanding stock meets shareholder resistance There's nothing like a little share-holder revolt to raise the cost of your company's shares. At least that's what That's What is one of the more idiosyncratic releases by solo steel-string guitar artist Leo Kottke. It is distinctive in it's jazzy nature and "talking" songs ("Buzzby" and "Husbandry"). Bob Johnson Bob Johnson may refer to:
In early September Johnson and Liberty Media Corp., a subsidiary of TeleCommunications Inc. (TCI (Trustworthy Computing Initiative) An umbrella term from Microsoft for its efforts to improve security in Windows. TCI was announced in 2002 after viruses such as Code Red and Nimda had succeeded in attacking numerous Windows computers. ), offered to buy 6 million shares of BET owned by shareholders, who currently control about 31% of the voting stock Voting stock The shares in a corporation that entitle the shareholder to vote. voting stock Stock for which the holder has the right to vote in the election of directors, in the appointment of auditors, or in other matters brought up at the . The $48-per-share offer was a 17% premium over the previous day's closing price. The following week, the stock climbed to $53. Within a week of the offer, however, the minority shareholders filed a class action lawsuit class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax against Johnson; John Malone, who heads TCI; and board of directors members Denzel Washington and National Public Radio President Delano Lewis, among others. The suit aims to "void and enjoin To direct, require, command, or admonish. Enjoin connotes a degree of urgency, as when a court enjoins one party in a lawsuit by ordering the person to do, or refrain from doing, something to prevent permanent loss to the other party or parties. defendants'" efforts to deprive the company's minority shareholders of their equity interest in BET as a grossly unfair and inadequate price and to usurp u·surp v. u·surped, u·surp·ing, u·surps v.tr. 1. To seize and hold (the power or rights of another, for example) by force and without legal authority. See Synonyms at appropriate. 2. the benefits of the company's growth and future prospects for the defendants' own benefit." In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke" put differently , they felt Johnson was low-balling them just as they believe BET is enjoying "newfound financial success." Mario Gabelli, BET's largest individual investor, who owns 12% of the company, refused to comment. Indeed, BET has come a long way since Johnson started the concern 18 years ago with a $15,000 loan and two hours of programming each day. Since then, BET Holdings has grown to include three additional cable channels, the BET Soundstage restaurant; BET Weekend, Emerge magazine and other entities. Future plans include a line of sports apparel, a nightclub at Disney's Pleasure Island resort in Florida and a hotel/casino in Las Vegas targeting African Americans. Regardless of who prevails in court, analysts believe these projects are not in jeopardy. So why go private? "Here is a guy furiously extending the BET brand, and he has to explain his motives and ambitions every step of the way to stockholders," says Spencer Grimes, an analyst at Smith Barney. "And you know what? That gets tiring." According to Nate Chapman, president o f the Baltimore-based Chapman Co., the problem with being a public company is that it must consistently meet quarterly earnings expectations so the stock will continue to appreciate. "But sometimes if you're looking to grow a company, often it takes a few quarters for initiatives to work out. In a private company situation, you don't have to worry and can take a longer view than what's going to affect you immediately." What Johnson does next is anyone's guess. The CEO declined repeated requests to be interviewed for this story. Yet, Chapman says the possibility looms that different parties, such as other media or cable companies, could make competing bids. Or Johnson, unwilling to pay as much as the stock is currently trading for, may decide to withdraw his offer. "The investment community in general has a lot of confidence in Johnson's leadership," says Chapman. "So going back to business as usual would not be the worst thing." [ILLUSTRATION OMITTED] |
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