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Comcast seeks merger with Philly subsidiary

Cable system operator Comcast Corp. said Wednesday that it submitted a merger proposal to the board of its subsidiary Comcast Cablevision of Philadelphia Inc.

The Philadelphia-based subsidiary is 92% owned by Comcast and is the general partner and a limited partner of Comcast Cablevision of Philadelphia L.P., which owns and operates the cable television system which passes 319,000 homes in the northwest and northeast portions of Philadelphia.

Comcast originally sold 350,000 shares of the subsidiary to the public at $ 7 a share in March 1983. The offering was part of its application to the city for a cable license. Today, the parent company controls about 1.5 million shares, with 135,000 shares held by the public.

Comcast said each shareholder — other than the parent company — would receive $ 90 in cash for each share of common stock. “We believe this price represents the true market value of the system,” said John Alchin, senior VP and treasurer of Comcast. Shares of the subsidiary, which closed Tuesday at $ 70, before the deal was announced, shot up $ 18 to close Wednesday at $ 88.

The outside directors of the subsidiary have formed a special committee, which will hire its own legal and investment banking counsel to consider the proposal. Alchin said the parent company does “not wish to rush the deliberations of the special committee or its advisors and expect it will be at least several weeks before a merger can take place.”