Time Warner Cable has more suitors
Among the alternatives, the company could set itself up for a buy by Charter or seek one of its own
Time Warner Cable, the second-largest US cable-TV provider, just lost a suitor. Another may be waiting in the wings.
Comcast Corp dropped its $45.2 billion (Dh165.8 billion) deal, valued at about $158.82 a share, to buy Time Warner Cable Friday after concluding regulators would reject it. Charter Communications Inc’s advisers have already reached out to Time Warner Cable to begin talks on an acquisition, people with knowledge of the matter said.
Charter, the fourth-largest US cable provider, lost out to Comcast more than a year ago in an effort to buy Time Warner Cable. Now it wants another shot. John Malone, who controls Charter’s largest investor, Liberty Media Corp, said “yes” in November when asked if Charter would try again if the Comcast deal failed.
The big question isn’t whether Charter will bid again, but for how much. It would likely have to dole out more than Comcast agreed to pay, which topped Charter’s own $132.50-a-share hostile bid in January 2014. Time Warner Cable shares have increased about 14 per cent since then. The price could be at least $151 a share, according to an estimate from Craig Moffett, an analyst at Moffett Nathanson.
“Time Warner Cable showed no appetite for being acquired by Charter at the time, and our suspicion is that that hasn’t changed,” Moffett said late Thursday in a note to clients. “Time Warner Cable is certain to argue that they are worth more now than they were then.”
Charter’s goal is to buy Time Warner Cable quickly, said the people, who asked not to be identified because the deliberations are private.
Charter, based in Stamford, Connecticut, has approached banks about financing, one person said.
Issue of price
Executives at the companies haven’t spoken yet and the issue of price or structure hasn’t been addressed, the people said. The talks may not result in a deal, they said.
After the planned merger with Comcast was terminated, Time Warner Cable CEO Rob Marcus said that his company was “a one-of-a-kind asset”. “We are confident we will continue to create significant value for shareholders,” Marcus said in a statement.
After blocking Comcast’s deal, regulators have signalled they are taking a tough stance on mergers that give too much power over the broadband market to one company.
“Any company that considers buying Time Warner Cable must carefully consider whether they can get it through the regulatory approvals,” Laura Martin, an analyst at Needham & Co, said in a note to clients.