Lin Broadcasting Corp. can take until mid-May to accept or reject the latest offer by AT&T Corp. to buy the last 48 percent of Lin for about $3.3 billion.
The $127.50 per share price was assessed by Wasserstein Perella & Co., the third appraisal group to offer an assessment on the value of Lin stock. AT&T is acquiring Lin on behalf of McCaw Cellular Communications Inc., the wireless giant AT&T purchased last fall. McCaw owns 52 percent of Lin, with a timely option to buy the remaining 48 percent at private market value.
AT&T’s appraisers, Morgan Stanley & Co., had set Lin’s value at $105 per share in February. However, Lin’s appraisers, Lehman Brothers Inc. and Bear, Stearns & Co., placed a higher value of $155 per share on the stock.
Lin has 45 days from the April 7 offer to make a decision. If Lin accepts, the two companies will reach a merger agreement, which must then be approved by a majority of the Lin public shareholders.
With profitable cellular licenses in markets such as New York, Los Angeles, Dallas and Houston, Lin would be a valuable asset in AT&T’s vision of offering nationwide wireless service. Plans to acquire Lin come on the heels of AT&T’s participation in the federal auction of personal communication services spectrum, where AT&T paid $1.68 billion for licenses in 21 markets.
Moody’s Investors Service said it intends to review AT&T’s senior debt rating for a possible downgrade. Moody’s said it will review AT&T’s financial flexibility in light of the Lin purchase and the company’s recent investments in the global telecom market.
McCaw bought 52 percent of Lin in 1989, and the purchase agreement included a buyout clause calling for McCaw to buy the outstanding 48 percent of Lin shares at private market value within five years.
The deadline has arrived and the option to continue with the acquisition is now in the hands of AT&T, which has been at odds with Lin over valuation of the shares. McCaw paid $153.11 per share in 1989, paying a total of $3.4 billion.
The Lin-McCaw agreement states that if the appraisals are more than 10 percent apart, a third investment group should be consulted, which has been done.
If AT&T doesn’t purchase the remaining 48 percent, all of Lin must be put up for sale, according to terms of the agreement.
