Mario Gabelli, a shareholder in US telco Telephone and Data Systems (TDS), has called on the company to acquire the minority shares in the mobile operator US Cellular that it does not already own.
Chicago-based TDS currently holds an 84% stake in US…
Mario Gabelli, a shareholder in US telco Telephone and Data Systems (TDS), has called on the company to acquire the minority shares in the mobile operator US Cellular that it does not already own.
Chicago-based TDS currently holds an 84% stake in US Cellular.
In a letter to TDS’s CEO Leroy Carlson, Gabelli said that the investment team at Gamco Investors had concluded that the TDS management should focus on negotiating with the minority shareholders in US Cellular with the view towards acquiring their shares in the company.
He said that, assuming a price of US$80 per share, this would lead to TDS having approximately US$1.9bn of consolidated net debt and TDS’s private market value would be US$72 per share.
“Such a purchase would go a long way to demonstrate that the Carlson family places the shareholders interest at center stage, is able to make a decisive decision and assuming this action would then be followed by a simplification of the TDS structure, we believe it would go a long way to helping ‘narrow the discount’ between the underlying value of TDS and its intrinsic value,” he wrote.
Several members of the Carlson family hold senior executive positions at TDS. Aside from CEO Leroy Carlson, William Carlson is the chairman, while Letitia Carlson and Prudence Carlson also sit on the board.
The TDS board announced a plan at the start of August to reclassify its special common shares into common shares without changing the company’s voting control.
Gabelli said that the Gamco Investors investment team had concluded that this would not work.
Gabelli’s letter was included in an SEC filing on 12 September.
A TDS spokeswoman said: “We continue to believe that our proposed amendments are the right step for TDS at this time to simplify our capital structure and improve liquidity for all shareowners, and increase financial flexibility.”
Gamco holds 6.52% of TDS’s special common shares and 10.44% of its common shares. It also holds an 8.44% stake in US Cellular.
