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CHTR Charter Communications Inc New

293.51
0.00 (0.00%)
Pre Market
Last Updated: 11:10:48
Delayed by 15 minutes
Share Name Share Symbol Market Type
Charter Communications Inc New NASDAQ:CHTR NASDAQ Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 293.51 293.51 294.00 17 11:10:48

Charter Communications Explores Bid for Time Warner Cable--3rd Update

24/04/2015 11:55pm

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By Shalini Ramachandran 

It didn't take long for Time Warner Cable Inc. to find itself back in play.

Charter Communications Inc. is laying the groundwork for a potential bid for the New York-based cable operator, according to people familiar with the matter, after Comcast Corp.'s deal to buy the company unraveled.

Comcast and Time Warner Cable on Friday announced they had dropped plans for a $45.2 billion merger that would have united the nation's two largest cable companies.

Charter, which is backed by cable pioneer John Malone's Liberty Broadband Corp., could approach Time Warner Cable with a proposal soon, the people said.

Mr. Malone and many analysts believe the U.S. cable industry would benefit from further consolidation, which could help companies deal with the stagnating pay TV business and make investments to capitalize on growth in broadband as streaming video takes off. Joining Charter and Time Warner Cable would create another industry heavyweight, with 15.6 million video subscribers and 16.4 million broadband customers, compared to 21.7 million and 20.7 million for Comcast, respectively.

Time Warner Cable rejected a bid from Charter before accepting a Comcast offer last year, and many of the company's concerns about a potential combination remain, a person familiar with the situation said.

Time Warner Cable is worried about the level of debt the combined company would have, since Charter would likely raise a large amount to finance a deal, the person said. And Time Warner Cable believes Charter's shares are overvalued, so it will be hesitant to accept a large amount of stock in any transaction. A Charter offer with a high proportion of cash in the mix would be better received by Time Warner Cable, the person said.

Indeed, Time Warner Cable believes it is in position to be an acquirer, though Charter might not be its target, because its stock is viewed as expensive, the person said.

In January 2014, Charter had proposed a takeover of Time Warner Cable at $132.50 a share in cash and stock. Time Warner Cable's board rejected that offer, demanding $160 a share with at least $100 of that in cash. Then Comcast swooped in with a cash-and-stock deal that valued Time Warner Cable at about $158.82 when it was announced.

People close to Charter acknowledge that they will have to come up with a better offer than what they presented to Time Warner Cable more than a year ago, given that Time Warner Cable's operations have improved and both companies' stock prices have climbed. Since the Comcast-Time Warner Cable merger was announced, the value of Charter's stock has climbed more than 40%. Time Warner Cable's shares have also climbed and jumped 4% on Friday to $155 after The Wall Street Journal reported Charter's interest.

Relations between the companies were strained when Charter went hostile last time around after its initial overtures were rejected, taking its offer directly to TWC shareholders. Charter is unlikely to make a hostile bid this time and wants to keep talks friendly, one of the people familiar with the matter said.

In an interview, Time Warner Cable Chief Executive Rob Marcus wouldn't comment on any possible deals Time Warner Cable might pursue, but said the company has the flexibility to make necessary moves.

"What I've said repeatedly is that we are in the business of maximizing shareholder value, and we fully intend to fulfill that obligation," Mr. Marcus said. "That could be achieved by running the business on a stand-alone basis, allocating capital smartly, managing our balance sheet or engaging in M&A as an acquirer or as a seller."

Mr. Marcus declined to say what price Time Warner Cable would ask for in any approach from Charter.

The unraveling this week of the Comcast deal also reverberated for Charter, scrambling two deals it had planned. Comcast had a deal with Charter to sell or spin off about four million subscribers that Comcast and Time Warner Cable planned to divest in their combination. Plus, Charter had agreed just last month to buy cable operator Bright House Networks LLC for $10 billion. That transaction was contingent on the Comcast-Time Warner Cable deal closing.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com

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