Cox Communications case - 4398 Words

Cox Communications Applied Corporate Finance Contents Executive Summary Background Gannett and other acquisitions: possibilities and constraints of financing Feline PRIDES securities: benefits and costs for Cox Communications Valuation of Gannett’s acquisition Conclusions and recommendations Appendix Executive Summary The main purpose of this report is to evaluate an appropriate financing strategy for Cox Communications. Cox Communications is one of the largest players in the cable industry. In 1999, the firm expected to make several acquisitions over the following years, spending around 7$-8$ billion in the process. Given this possibility, the firm had†¦show more content†¦If Cox was able to buy these, it would be gaining about 522.000 new customers. This acquisition, along with the others Cox was already negotiating, would allow Cox’s subscribers’ base to grow over 60% only in 1999, so it was in fact an extremely important purchase. Cox Communications had four different types of financing choices. It could finance them through equity (issuing new equity), through debt (by borrowing money or issuing bonds), through hybrid securities, which is a type of financing that mixes the properties of equity and debt, or it can be financed by non-strategic assets selling. The Cox family had the intention of preserving the control of the firm and it was a top priority for them that the rating of the firm was maintained. However, since in our point of view their control is sufficiently large to be further diluted and still control the firm, there can be a change in the family’s plans. If that is the case, the financing must be done as soon as possible, taking into consideration that it has a direct cost of 2%-3% of the amount raised (fees and expenses) and that the price of shares usually decreases when new shares are issued (according to academic studies the reduction is around 3%-4% of the stock price, nonetheless itShow MoreRelatedEssay on Cox Communications Case Study913 Words   |  4 PagesCox Communications, Inc. Applied Corporate Finance Prof. Josà © Neves Adelino Prof. Carla Peixoto Prof. Andrà © Fernando Group 9 Ana Rita Miranda 472 Carolina Oliveira 423 Henrique Queiroz 453 Joà £o Santos 438 Tiago Pinho 403 Applied Corporate Finance Executive Summary By mid-1999, Cox Communications, majority-owned by the Cox family, was about to take its first step into a planned $7Bn acquisition spree, which would let it stand as a top-tier communication sector firm in the coming yearsRead MoreCox Communications Case Essay1726 Words   |  7 PagesCox items for discussion 1. 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