Charter offers to buy Time Warner


Charter CommunicationsFrom a Seeking Alpha bulletin: “Following weeks of reports and speculation, Charter (CHTR) has offered to buy Time Warner Cable (TWC) for $132.50/share, or $61B after factoring debt. Charter is offering $83/share in cash and $49.50/share in stock. Charter has sent a letter to TWC CEO Rob Marcus outlining its offer. The offer price represents just a $0.10/share premium to TWC’s Monday close. But shares have already rallied on expectations of a deal.”

Last month (12/16), we reported Charter was preparing an offer letter of cash and stock to acquire Time Warner Cable for under $135 a share: A bid  of $135 a share would value TWC at about $62 billion, including the value of its debt. That’s about 7.5 times estimates for its 2014 EBITDA of $8.24 billion, data compiled by Bloomberg show. Charter currently trades at a multiple of 8.7 times estimated 2014 EBITDA, while Comcast fetches 7.5 times.”

Comcast and Cox Communications are not part of the offer, sources told Bloomberg. Charter is also reportedly considering a joint deal with Comcast to acquire TWC together and split up its assets.

Comcast just named a new head of corporate development and strategy in Alexander Evans amid speculation that major MSOs in merger talks. Evans hails from Providence Equity Partners, where he led the firm’s New York office and was global co-head of the communications sector. Comcast has tapped JPMorgan for advice as it evaluates a potential bid for the company as well.

Comcast could be interested in owning the cable assets of New York, Los Angeles, or both, Craig Moffett, an analyst at MoffettNathanson LLC, told Bloomberg. Comcast owns assets in California, as well as in the Eastern U.S.

“I wouldn’t be surprised if Comcast comes in to do a systems swap with Charter,” Harrigan said, referring to the possibility that the two cable companies could exchange geographic areas so that both could end up with contiguously placed markets that would be easier to service.

RBR-TVBR observation: Comcast is likely waiting to see how TWC reacts to Charter’s bid, then it would know better what number to offer. As well, TWC and Charter could do a deal and then look at accepting other offers, likely (of course) from Comcast.