Charter Communications said Monday it has offered to buy Time Warner
Cable for about $61 billion, a stunning bid that would merge the No. 4
and No. 2 cable companies in the United States and shake up the troubled
cable television industry.
Time Warner Cable's board of directors quickly rejected the offer, calling it "a third grossly inadequate proposal."
MERGER MONDAY: TWC, Nest, Suntory bids
A TREND? Offer may make waves in cable industry
bid of $132.50 a share for the much larger Time Warner Cable represents
one of the biggest takeover offers on Wall Street since the financial
crisis. It would include $37 billion in cash and stock and the rest in
assuming TWC's debt. It also might kick off a bidding war for TWC, with
other cable operators such as Comcast and Cox Communications entering
"Charter's latest proposal is a non-starter," said TWC's
CEO Robert Marcus in a statement Monday. "Not only is the nominal
valuation far too low, but because a significant portion of the purchase
price would be in Charter stock, the actual value delivered to TWC
shareholders could be substantially lower given the valuation,
operational and significant balance sheet risks embedded in Charter's
Marcus said his company is willing to accept a price of
$160 per TWC share, consisting of $100 in cash and $60 per share of
Charter common stock.
Charter had previously offered cash and stock valued at about $114 a
share in June and about $127 in October, TWC noted in its statement. TWC
rejected those offers as it continued to weigh other options, including
talks with other cable companies.
"Time Warner Cable quickly
rejected our proposals in June and October, and refused to engage until
we met in December. I communicated a willingness to submit a revised
proposal in the low $130s, including a cash component of approximately
$83," wrote Charter CEO Tom Rutledge in a letter to Marcus Monday.
Shares of Time Warner Cable rose 1.8% in after-hours trading Monday to $134.84.
competitors vying to buy TWC, its shares have risen nearly 15% in the
last six months. Citing the stock's rise and TWC's reluctance to engage
more fully in talks for a merger, Rutledge is revealing his latest offer
publicly "to bring the matter to shareholders directly," Charter said.
his letter, Rutledge also said TWC responded to his offer in December
with "a verbal offer at an unrealistic price expectation."
financing to complete this transaction is fully negotiated, and we can
be in a position to sign commitment letters in a matter of days,"
Facing greater competition from online streaming
video operators, pay-TV providers are struggling to hold on to
subscribers. Content creators are also demanding higher pay for
licensing their shows. Executives and analysts have been calling for an
industry consolidation to shake out weaker players and give surviving
companies greater bargaining power in dealing with content suppliers.