By Sruthi Ramakrishnan
Aug 2 (Reuters) - Three minority shareholders of Fisher
Communications Inc said a $373 million takeover bid by
Sinclair Broadcast Group Inc undervalues the TV
broadcaster and are looking to activist investor Mario Gabelli
to derail the offer.
Sinclair, which describes itself as the largest television
broadcasting group in the United States, said in April it would
buy Seattle-based Fisher for $41 a share in cash to expand its
operations in the western United States.
Fisher shares touched a high of $41.57 on Friday, after
opening at $40.90 on the Nasdaq.
For the deal to go through, about two-thirds of Fisher's
shareholders need to vote in favor at a meeting scheduled for
Tuesday, Aug. 6.
Three investors in Fisher, with a cumulative stake of more
than 5 percent, said they believed Sinclair's offer undervalued
the company. They declined to be identified because of the
sensitivity of the situation.
Despite opposing the offer, two of them said they would be
unlikely to vote against it unless a larger shareholder were to
push for a higher price.
That investor would probably need to be Mario Gabelli, whose
26.3 percent stake in Fisher as of March 31 made him the
company's biggest shareholder.
"We'd need somebody like him to do that for us to come (out)
against it," one of the minority shareholders said.
Gabelli's Gamco Investors Inc bought Fisher shares
in separate tranches last month, at time paying just above
Sinclair's offer price, according to SEC filings.
Gabelli told Reuters that his investment team was still
divided on which way to vote. Some of his fund managers want a
better price while others want to take the deal on offer.
"I will make the decision pretty soon," he said. "If we vote
against, we will file a 13D ... probably no later than Monday."
With acquisitions totaling about $2 billion in the last
year, Baltimore-based Sinclair has been among the most active TV
station buyers in a broadcasting industry boom.
Renewed interest in TV stations has been driven by revenue
streams available from advertising and cable operators, who pay
stations re-transmission fees to carry their channels.
Newspaper publishers Gannett Co Inc and Tribune Co
announced acquisitions worth billions of dollars in
the last two months to add heft to their TV operations.
Fisher owns 20 television stations in eight markets and
three radio stations. It runs CBS and ABC affiliates such as
KPIC TV, KCBY TV and KATU TV.
Seattle-Tacoma and Portland -- key markets for Fisher --
ranked 12th and 22nd, respectively, in Nielsen's latest local
television market rankings based on market size. ()
On completion of the Fisher deal, Sinclair said it would be
able to reach more than a third of U.S. households with a
"We are excited by Fisher's standalone prospects. We believe
Fisher would be valued significantly above $41 (a share) if the
Sinclair deal is voted down," a second investor told Reuters.
A fair distribution of the value created through a
Fisher-Sinclair combination would be $48 a share, the
Gabelli, whose funds handle more than $30 billion in assets,
has been pushing Fisher for about a year to consider a leveraged
restructuring with funds borrowed from shareholders. ()
He has proposed the creation of a new company that could buy
Fisher for $40 per share by issuing bonds to shareholders, and
then distribute $36 in cash and one share of the new company to
each Fisher shareholder.
Fisher declined to comment and Sinclair was not immediately
available for comment.
Fisher's shares, which have risen 5 percent since the deal
was announced, were trading at $41.40 in noon trade. Sinclair's
stock, which rose 27 percent in the same period, was trading