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   Technology StocksAssociated Group / Teligent


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To: zebraspot who wrote (59)4/21/1999 4:04:00 AM
From: zebraspot
   of 76
 
WSJ story on TGNT and the sector:

post.messages.yahoo.com

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To: Tecinvestor who wrote (56)4/27/1999 8:29:00 AM
From: Tecinvestor
   of 76
 
On April 26, 1999, eleven days after having raised the target price from $60 to $70, Legg Mason analysts Bradley A. Williams and Sean Butson reduced it to $60. Legg Mason set forth the following:

* Lowering rating on AGRPB due to the increased valuation risk to underlying portfolio posed by AT&T bid for Media One.

* Downside risk to AGRPB valuation is tempered by diversification of the securities portfolio, but investor sentiment toward Associated Group will likely be limited near-term.

* Several positives continue to offset the negative shift in the AT&T opinion, which may provide opportunistic investors an entry point if the discount to net asset value widens considerably.

* Reducing target price from $70 to $60.

IMHO, Legg Mason dropped the ball on this one. I think they pulled the trigger too quickly in their assessment of T's bid for UMG, which I perceive as a long term positive. Moreover, I have not yet given up on management's efforts, if any, to rectify the problem of the huge discount to NAV.

AGRP is scheduled for a shareholders' meeting on June 3, 1999. I am hoping that by then, we will see some positive news flowing from management.

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To: Tecinvestor who wrote (61)6/1/1999 10:56:00 AM
From: biffpincus
   of 76
 
Thats all she wrote ... Associated Group sold ...

The street apparently isn't too enthusiastic with the deal ... AGRPA down 5 / AGRPB down 1 ... market capitalization before deal was about 3 1/2 billion ... and finalized deal was for 3 Billion ... looks like the family (Berkmans) needed some money ... biff

p.s. TGNT is up about 9 on the deal

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Liberty Media to buy Associated in $3 billion deal

ENGLEWOOD, Colo., June 1 (Reuters) - Cable TV programmer Liberty Media Group said Tuesday it would buy cellular phone and telecommunications company The Associated Group Inc. in a $3 billion all-stock deal. Liberty Media, a leading cable TV programmer which belongs to AT&T Corp. , said in a statement that it would assume $187 million of Associated debt.

Liberty Media said the companies had signed a definitive agreement for the merger. The deal is structured to be tax-free to Associated shareholders. Associated co-founded and holds a roughly 41 percent interest in Teligent Inc. , a provider of broadband communications services to small and medium-sized business customers.

Associated shareholders will get 25.89 million shares of Class A Liberty Media Group common stock, or 51.78 million shares following a two-for-one stock split on June 11.

Associated stockholders also will get 19.7 million shares of AT&T Corp. Common Stock. They will get 0.6206 shares -- 1.2411 shares post split -- of Class A Liberty Media Group
common stock and 0.4727 shares of AT&T common stock for each
share of Associated Class A and Class B common stock.

((--Ian Simpson, Wall Street desk, (212) 859-1879))


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To: biffpincus who wrote (62)6/1/1999 4:07:00 PM
From: zebraspot
   of 76
 
Seems like we got sold a bit of a bill o' goods by the analysts, etc. that told us this co. was worth $80 plus. (Or, are the Berkman's selling too cheap? --- doubtful). Glad I own the B's, anyway.

I'm holding on to get at least $65 for it. These new arb situations usually swing up and down ~5% in the first week or so.

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To: zebraspot who wrote (63)6/2/1999 2:11:00 AM
From: biffpincus
   of 76
 
<<I'm holding on to get at least $65 for it. These new arb situations usually swing up and down ~5% in the first week or so.
>>


It was kind of interesting how no one could figure out the price paid and the premium offered (which was next to nothing in the B's and nothing at all in the A's) ... just subtracting the market cap of Associated from the Liberty Media offer could (and did) make some easy money for the quick fingered investor in the early trading this morning ... was a crazy day to risk buying anything today though ... we just as easily could have ended 500 points down today based on news and technical fundamentals ... apparently the Berkmans see no profitable future in Trueposition (which is surprising and telling) ... I will be very interested to get feedback and analysis of this deal from folks in the know ... but basically, this deal was not that impressive and thus, not profitable to investors, and I was surprised by it ... biff

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To: biffpincus who wrote (64)6/2/1999 2:18:00 PM
From: Don S.Boller
   of 76
 
biff: Guess the Berkmans' hook was avoiding taxes...think
they sold too cheaply...therefore I bailed out today.
Best to all.
Don

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To: Don S.Boller who wrote (65)6/2/1999 7:52:00 PM
From: biffpincus
   of 76
 
Found an indepth explanation of this stock deal in today's New York Times, and why Associated Group didn't go for the premium that everyone assumed this company deserved ....

Can you say 800 million dollars capital gains break?

The financial wheeling-dealings going on in this takeover require a finance degree (advanced) to understand (at least for me) .... but it is an interesting story of John Malone, CEO of TCI, at work ....

biff

p.s. Am still not sure of the tax break Associated insiders are going to get and if it translates into dollars for its individual investors ...

XXXXXXXXXXXXXXXXXXXXXXXx

New York Times
June 2, 1999

Liberty Media Agrees to Acquire Associated Group
By SETH SCHIESEL

Liberty Media Group, the television programming operation controlled by John C. Malone, expanded into the wireless communications business Tuesday by agreeing to acquire Associated Group Inc. in a deal worth perhaps $2.8 billion in stock.

Associated, based in Pittsburgh, is the largest investor in Teligent Inc., which provides telephone and data communications services to companies using advanced wireless technology. Associated owns about 41 percent of Teligent, which is run by Alex J. Mandl, a former president and chief operating officer of the AT&T Corporation.

Associated also owns Trueposition Inc., a small company that is developing technology to allow wireless telephone companies to locate callers, part of a Mexican cellular carrier and a handful of radio stations.

Liberty used to be part of Tele-Communications Inc., one of the nation's biggest cable-television companies. Since AT&T completed its acquisition of TCI earlier this year, Liberty has traded as an AT&T tracking stock. But AT&T has no stake in Liberty, which remains under the control of Malone, TCI's former chairman.

Malone is known for his financial wizardry, and the Associated deal is typically Malonian in its financial complexity, not least because Associated already owned big parts of both Liberty and AT&T.

At the same time, the Berkman family, which essentially controls Associated, is trying to use the deal to minimize the substantial tax bill the company could face were it to simply sell its assets piecemeal.

Twenty years ago, Associated sold a cable-television system in the Ohio Valley region of Pennsylvania to TCI for about $6.5 million in TCI stock. That stake is now worth about $2 billion in Liberty and AT&T stock. TCI's shareholders received both Liberty and AT&T shares in the AT&T-TCI merger.

Because of the phenomenal rise in the value of Associated's stake in TCI, a simple sale of those shares would generate capital gains taxes of as much as $800 million.

Malone, who is now one of the biggest holders of AT&T stock and sits on AT&T's board, stepped up to help Associated with its problem and won the cooperation of AT&T.

Malone could use AT&T's help because he did not appear to particularly want to invest in AT&T. The entire idea behind the Liberty tracking stock is to allow investors to invest in a company distinct from the core AT&T. But were Liberty to acquire Associated outright, that would entail issuing additional Liberty shares to buy a company that included about 19.7 million shares of AT&T, worth about $1.1 billion.

So AT&T agreed to put up exactly as many shares as Associated already owned -- 19,719,274 -- while Liberty contributed about 25.9 million shares of its own stock. For AT&T, the deal was a wash because it intends to retire the 19.7 million shares it will get from Liberty; the total number of AT&T's outstanding shares will stay the same.

But even Liberty's 25.9-million- share contribution was not a straight stock-for-assets swap. In addition to its AT&T shares, Associated already owned about 14.4 million shares of Liberty.

So, based on Liberty's closing price Friday of $66.4375, the value of stock that Associated's shareholders are set to receive in excess of what their company already owned in AT&T and Liberty is only about $770 million. Liberty has also agreed to assume up to $187 million in Associated debt, so the Teligent stake, Trueposition and Associated's other investments garnered only about $957 million.

That is a bargain for Liberty and Malone. Based on Teligent's closing price on Friday of $49.125, Associated's 41 percent stake in Teligent alone was worth $1.05 billion.

But Malone got the bargain because he helped the Berkmans achieve their main goal of reducing the potential $800 million tax bill while getting a good price for their assets. That process was made relatively painless for Associated because AT&T and Liberty may retire the Associated-owned shares, to which large capital gains apply, without paying any capital gains taxes. If an unrelated company, say MCI Worldcom, were to acquire Associated and then sell the AT&T and Liberty shares, MCI Worldcom would have to pay the taxes.

The implied value of the avoided taxes was seen yesterday in the rise of Teligent's shares, which rose $5.4375, to $54.5625, in Nasdaq trading.

"Having Liberty as an important investor brings a partner to the table who will add to the idea flow, add to the opportunities," Mandl said yesterday. "It will give us a chance to move Teligent even faster and further than we have before."

Executives close to the deal said that Malone could give Teligent more financial flexibility than it had enjoyed with Associated. The Berkmans, led by Myles P. Berkman, Associated's chairman, had appeared wary of diluting their stake in Teligent through acquisitions. Malone, by contrast, had never been shy in the merger arena.

Associated was advised in the transaction by Salomon Smith Barney. Liberty did not appear to use an outside finanical adviser.


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To: biffpincus who wrote (66)6/2/1999 7:58:00 PM
From: Don S.Boller
   of 76
 
biffpincus: FOR THOSE HANGING ON (I sold today)...IT WILL
BE VERY INTERESTING TO SEE...How Alex Mandl and John Malone
mesh...with a divided BofD too. These are two powerful men
and could be an oil/water mix...
BWDIK
Best,
Don

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To: Don S.Boller who wrote (67)6/3/1999 12:14:00 AM
From: biffpincus
   of 76
 
"...IT WILL BE VERY INTERESTING TO SEE...How Alex Mandl and John Malone mesh ... with a divided BofD too.
These are two powerful men and could be an oil/water mix..."

Agreed, I really think that Mr. Malone is quite the character and a savy investor - but it could be a strange little mix between the two of them ... The Berkmans were the ultimate in letting their hired thoroughbreds run the race - they had deep pockets and were hands
off : if you were a CEO, you couldn't have better backing ...

What a deal Mr. Malone got (at the expense of current shareholders) ... I still haven't figured out the status of the "tax free" gains this sale represents to shareholders ... does selling now before the deal closes cause a more significant taxable event than if one waits? Am interested in anyone's take on that subject.

biff

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To: biffpincus who wrote (68)6/4/1999 5:30:00 PM
From: zebraspot
   of 76
 
If you get and hang on to the tax-free shares in Liberty and T, you might benefit eventually from the good deal that they got from AGRP.

The fact that Malone is suddenly interested in the fixed wireless service industry seems to confirm its great future.

After thinking about it, I think I'll keep my AGRP shares, and buy more TGNT, NXLK and WCII on dips.

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