Time Warner Cable Rejects Charter Buyout Offer

Time Warner Cable Rejects Charter Buyout Offer
By Warp3 [Public domain], via Wikimedia Commons

Time Warner Cable Inc (NYSE:TWC) rejected an acquisition offer from Charter Communications, Inc. (NASDAQ:CHTR), saying the $62 billion offer grossly undervalues the company.

Time Warner Cable Inc (NYSE:TWC) CEO Rob Marcus called the $132.50-a-share bid a ‘low-ball offer’.

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Charter’s offer for Time Warner Cable

As reported earlier, Charter Communications, Inc. (NASDAQ:CHTR) has been pursuing a takeover bid for Time Warner Cable Inc (NYSE:TWC). John Malone, chairman of Liberty Media Corp (NASDAQ:LMCA) (NASDAQ:LMCB) initiated a deal between Charter and Time Warner Cable. Malone aims to regain his status and shake up the cable industry as Cable King. Liberty Media owns a 27% stake in Charter Communications.

In his interview, Charter Communications’ CEO Tom Rutledge indicated that his proposal has not received a serious response.

He said that the proposal includes about $83 cash per share and about $49.50 in Charter stock, valuing the second-largest U.S. cable provider at more than $61 billion, including debt.

Low-ball offer

Time Warner Cable Inc (NYSE:TWC)’s board rejected Charter Communications, Inc. (NASDAQ:CHTR)’s offer, calling it ‘grossly inadequate’. Marcus said the company is open to a deal with Charter for $160 a share, or $100 in cash and $60 in Charter common stock.

In an interview, Marcus said: “Here’s what happened: We didn’t put our house up for sale, and we got a knock on the door and someone made a low-ball offer. They want a premium asset at a bargain-basement price, and that’s just not going to happen’.

All options open

According to the letter sent by Charter Communications, Inc. (NASDAQ:CHTR) to Marcus, Charter is preserving ‘all options’ going forward. The options include nominating a slate of directors to Time Warner Cable Inc (NYSE:TWC)’s board or a tender offer. Charter has fully negotiated financing and can be in a position to sign commitment letters in a matter of days.

Sam Gustin of Business Time notes that by the end of the year, Time Warner Cable Inc (NYSE:TWC) could be controlled by John Malone’s Liberty Media group depending on the outcome of the fight. With 27% holding in Charter Communications, Inc. (NASDAQ:CHTR), he is the largest shareholder of Charter. Malone is using Charter to regain a foothold in the U.S. telecom market.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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