Time Warner Cable Rejects Charter Buyout Offer

By Mani
Updated on

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’.

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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