Mediacom agrees to $600 million buyout by founder

The board of directors of Mediacom Communications Corp., the dominant cable television provider in Iowa, has agreed to a $600 million buyout by the company's founder and chief executive officer.

Rocco Commisso owns 40 percent of Mediacom's Class A and Class B shares, and has 87 percent voting control. Under the terms of the merger, Commisso will buy the stock he doesn't own for $8.75 a share, 28 percent more than Mediacom's closing price on Friday and 64 percent above the $6 per share he offered for Mediacom in May.

Mediacom shares rose $1.53, or 22 percent, to $8.39 per share in morning trading on the Nasdaq Stock Market.

The deal must still be approved by shareholders who hold a majority of the Class A stock, excluding those owned by Commisso, his family and Mediacom directors and officers. The transaction is expected to close in the first half of 2011.

Middletown, N.Y.-based Mediacom would become a privately-owned provider of cable TV, telephone and Internet services. The company has about 1.2 million cable TV customers mostly in Iowa and Illinois, making it the eighth-largest U.S. cable operator.

Mediacom on Nov. 8 reported its third-quarter loss narrowed to $4 million, or 6 cents a share, from a loss of $10 million, or 15 cents a share in the same quarter of 2009. Sales rose 3 percent to $374 million as the number of Internet customers increased.

Two law firms responded to Monday's merger announcement with statements that they are investigating whether Mediacom's board of directors breached its fiduciary responsibility by not shopping for a higher price for the company.